NZD/GBP: Further downside coming towards 0.52 - Westpac

In view of Imre Speizer, Research Analyst at Westpac, last week’s break below 0.56 has been sustained for NZD/GBP cross, suggesting further downside toward 0.52 during the weeks ahead.

Key Quotes

“PM May’s announcement of a snap General Election triggered a sharp covering of GBP shorts on the basis that May’s majority and mandate for Brexit negotiations and domestic reforms will be strengthened.”

“Event wise this week, we have confidence surveys (business and consumer) and 1Q GDP (28th). However, the 8 June General Election and Brexit negotiations will outweigh data.”

“3 months ahead: Brexit may seem secondary in the near term, but the EU (ex-UK) Brexit Summit on 29th April should provide some clarity on the EU’s negotiating stance. Political aspects may be dominant, but Brexit uncertainties remain. Should there be any faltering in Retail Sales, confidence and then 1Q GDP, the solid post-Brexit-vote performance of the economy could show the fragility that so concerns the BoE and most economists. We stick with our view that NZD/GBP could test 0.60 by year end.”