NZD/GBP is breaking down - Westpac

Imre Speizer, Research Analyst at Westpac, suggests that the Brexit referendum on 23 June has been the dominant influence on the GBP this year.

Key Quotes

“The risk of a “yes” vote hurt the GBP until April, but more recently markets have played down the risk.

That recent swing in sentiment saw NZD/GBP fall by around 8% to 0.4545. However, we expect further volatility ahead of the vote, as poll indications oscillate.

Assuming the vote is “no”, a relief rally in the GBP should push the cross below 0.4500. Thereafter, if the BoE remains on track to raise the policy rate by early 2017, yield differentials should favour the cross falling further.”