Lack of faith in Chequers proposal could hurt Sterling

GBP/NZD– Sterling continues to struggle against the majority of major currencies although we have seen a recent spike against the New Zealand Dollar. Be wary of think this rally will continue however. The lack of clarity surrounding the Brexit is still a huge concern amongst investors.

Theresa May’s chequers Brexit proposal has been heavily criticised by members of her own cabinet and considering there has to be a vote in order to pass the deal it does not bode well for the pound.

Boris Johnson has publically criticised the current deal and has said that the deal in it’s present format would leave the UK with “didly squat” post Brexit. Personally, I don’t listen to Boris, I think he is always chasing his own agenda and if there is any inkling the buffoon will get in power I will be paying even more attention to exchange rates as I will be emigrating.

Former Brexit Chief Negotiator for the UK, David Davis has more credibility however, and he has also stated his discomfort with the current deal and says he will not pass the deal when it comes to the vote.

If the proposal does not go through and the UK has to go back the drawing board I would expect Sterling to suffer substantial losses.

The “no deal” scenario is the worry from investors and Reuters have indicated there is a 25% chance this may occur. Liam Fox UK trade secretary has stated there is a 60% of a “no deal”.

New Zealand is not without it’s problems however. The ongoing trade war between the US and China is hitting the New Zealand economy. This is due to New Zealand’s heavy reliance on China purchasing exports. If the situation escalates it will hit NZD.

At present I feel the Brexit uncertainty will outweigh New Zealand’s trade war concerns and if you have a NZD requirement I would be looking to take advantage of current levels. If you’d like to discuss these factors further to see how your requirement could be impacted, feel free to get in touch at [email protected].

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