The New Zealand Dollar has found support under 1.75 against the Pound over the past week but is still struggling to make a sustained move, despite the growing fears surrounding Brexit. This is quite poignant in my opinion, as the Pound has suffered against most of the major currencies of late. Any clients holding NZD should be keeping a close eye on today’s budget, as any indication of increased future economic growth could drive GBP/NZD through 1.75, which has become a key resistance level for the pair.
I do not expect one way traffic, even if UK Chancellor Philip Hammond is bullish in today’s budget statement. The markets are seemingly becoming increasingly concerned about Brexit and assuming the triggering of Article 50 goes ahead as expected this month, I cannot foresee a sustained run for Sterling through this period.
The current market remains unpredictable at best and with global investor confidence fragile, commodity based currencies such as the NZD are always at risk. They are reliant on global growth, in New Zealand’s case particularly the export of their dairy products. Therefore, any slowdown in this sector will always hit their economy hard and the NZD will inevitably suffer as a result.
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