Pound to New Zealand Dollar Exchange Rate Edging Higher as Coronavirus Jitters Persist
The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate was kept under pressure yesterday. Sterling (GBP) movement was mixed, while the New Zealand Dollar (NZD) found support in a risk rebound.
However, GBP/NZD has been able to avoid losing more of last week’s losses. GBP/NZD has fallen from the interbank level of 2.04 to around 2.01 this week so far.
GBP/NZD has been able to hold above the past day’s lows of 2.00. The pair remains well above last week’s opening interbank levels of 1.97.
Most of this week’s Pound to New Zealand Dollar movement so far has been due to sharp Pound movement and data. Brexit and coronavirus uncertainties are likely to drive the pair towards the end of the week.
Pound (GBP) Exchange Rates Steady as Markets Expect a Brexit Deal
Analysts predict that Britain and the EU will secure some kind of trade deal by the end of 2020’s Brexit transition period. This is despite the Pound’s (GBP) panic at UK Prime Minister Boris Johnson’s tough tone at the beginning of the week.
The Pound plummeted across the board when Johnson and EU negotiators took tough Brexit stances. This was due to fears of a hard Brexit being a possible outcome at the end of this year.
However, Sterling has been steadying slightly since yesterday. The selloff is running out of steam, and investors are holding onto hopes that UK-EU relations will gradually improve over the year.
Some analysts also think that the Sterling rally which followed the Bank of England (BoE) decision last week has put some life back into the Pound. This, as well as hopes for a UK economic rebound, are keeping Sterling from falling too far.
New Zealand Dollar (NZD) Exchange Rate Rebound Limited amid Coronavirus Jitters
The New Zealand Dollar (NZD) saw a significant hit from coronavirus outbreak news last week.
The currency has recovered from its worst levels this week and sustained some gains against a weaker Pound (GBP). However, its gains are limited as the coronavirus continues to spread.
The New Zealand Dollar’s strength is limited by persisting fears that the coronavirus could have a notable negative impact on the global economy.
Investors bought the ‘Kiwi’ from its lows at the beginning of the week, but its rebound has already run out of steam.
This morning’s New Zealand job market data beat expectations and offset Reserve Bank of New Zealand (RBNZ) rate cut bets. However, it failed to give the New Zealand Dollar much reason to keep rallying.
Pound to New Zealand Dollar (GBP/NZD) Exchange Rate Awaits Global Developments
Most of this week’s notable UK and New Zealand data has been published already. It leaves the Pound to New Zealand Dollar (GBP/NZD) exchange rate to react to more global factors for the remainder of the week.
Pound (GBP) investors are likely to pay close attention to the tones of UK and EU negotiators now that Brexit fears have returned.
Any surprising comments on tough stances or negotiations themselves have the potential to influence the Pound’s movement. For example, if negotiators are optimistic about the chances of a deal, the Pound could see gains.
Brexit uncertainty is likely to limit the Pound’s potential for gains. Sterling may be able to avoid losses amid hopes that Britain’s economy will see stronger performance in the coming months.
The New Zealand Dollar (NZD), on the other hand, could see weaker performance if coronavirus concerns worsen again following this week’s signs of calm.
Overall, the Pound to New Zealand Dollar (GBP/NZD) exchange rate will be driven by fairly unpredictable factors, at least until next week’s key UK data and Reserve Bank of New Zealand (RBNZ) policy decision.