GBP-NZD rate remains steady
- GBP-NZD rate remains steady
- Markets await Supreme Court ruling on Brexit
- Brexit’s domination of Sterling set to continue
Since the middle of November 2016, the GBP-NZD exchange rate has remained steady, trading in a range between 1.75 and 1.80. The current range is steadily rising, which is an encouraging sign for the Pound. The lows are getting higher and the range is slowly consolidating upwards. It looks likely that this pattern will continue throughout January 2017, or certainly until the Supreme Court Judgement on the UK’s exit from the EU, which is due to take place at some point this month.
Markets await Supreme Court ruling on Brexit
As has been the case since the beginning of 2016, we expect technical analysis to be largely irrelevant. The crucial point to look for will be the Supreme Court’s decision on whether Brexit will require an Act of Parliament, or whether the UK government can use its prerogative powers to push Brexit through.
Brexit’s domination of Sterling set to continue
The Supreme Court ruling follows an appeal; when the original court ruling made it clear that Parliament would have a say in how Brexit should play out, we saw the Pound rally on hopes for a ‘softer Brexit’. The date for the ruling has not yet been given, but it will be in January 2017 – tradition dictates that it will come on a Wednesday. Brexit news has dominated Sterling’s movements throughout 2016 in this way – we expect this to be much the same and follow a similar pattern for 2017.
Guidance for NZD Buyers
Those buying New Zealand Dollars should keep an eye out for the outcome of the Supreme Court ruling and target a 1.80 level. There is some resistance just above 1.80, so we would suggest that this is a good level to aim for. Short term risk is at 1.74. If the rate drops below there, we could see this pair drop to trendline support around 1.65.
Guidance for NZD Sellers
If the Supreme Court decides that the UK government alone has the legal right to instigate Brexit (thus signalling a ‘harder Brexit’) then NZD sellers should look to take advantage of any immediate Sterling weakness. Until we have the decision, however, it looks as though the GBP-NZD rate will remain in this current trading pattern between 1.74 and 1.80. A breakout either side of that would suggest a fundamental change and the wider range is between 1.65 and 1.83.
Quarterly forecast by David Johnson
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