Pound Sterling New Zealand Dollar (GBP/NZD) Exchange Rate Muted as Johnson Encourages Some People to Return to Work
The Pound Sterling New Zealand Dollar (GBP/NZD) exchange rate remained muted on Monday morning. This left the pairing trading at around NZ$2.0248.
Hopes for a quicker than expected global recovery offered the pairing some support at the start of the week.
The United States and other countries moved to re-open their economies. Sunday also saw Prime Minister Boris Johnson outline plans to slowly ease the country’s coronavirus lockdown.
In the televised address, Johnson announced limited easing of coronavirus restrictions, including encouraging some people to return to work.
The Prime Minister’s government wants the rest of the United Kingdom to adopt the same approach. However, there were immediate divisions with the leaders of Wales, Northern Ireland and Scotland. They announced they were sticking to the existing ‘stay-at-home’ message.
GBP remained under pressure as Boris Johnson’s government has faced criticism over its handling of the pandemic.
The UK has now seen almost 32,000 deaths. This is the second highest death toll in the world, just behind the United States.
Raab: Non-Essential Workers to Go Back to Work in June
Meanwhile, on Monday, Foreign Secretary Dominic Raab said non-essential workers would not go back to work until June at the earliest.
He also said that some other sectors would not return to work until July at the earliest.
Speaking on Monday, he said:
‘There’s the other changes for things like non-essential retail and people going back to school, particularly primary school, which won’t start until the earliest on the first of June, subject to conditions.
‘Starting from the 4th of July at the very earliest, those other sectors where they are inherently more difficult because people are mixing together and it’s difficult to maintain the social distancing, we wouldn’t be able to say […] that we would start them at least until the 4th of July.’
New Zealand Plans to Ease Further Coronavirus Restrictions on Thursday
Meanwhile, the ‘Kiwi’ is likely to edge higher after Prime Minister Jacinda Arden said she would ease further restrictions on Thursday.
The Prime Minister announced the country would be moving from the current level three restrictions to level two from midnight on Wednesday.
This means retail stores, cafes, restaurants, cinemas, malls, and other public spaces can reopen for the first time since March.
However, all these venues will still require social distancing which means they will not be able to operate at full capacity. This left NZD under pressure at the start of the week.
Commenting on this, Hamish Pepper, fixed income and currency strategist at Harbour Asset Management said:
‘There’s been a minimally positive reaction, probably because so many people have been expecting this.
‘I think the real surprise today would’ve been if we didn’t come out of level 3, and then there would’ve been a negative reaction. I think this has just met expectations.’
Added to this, the New Zealand Dollar remained under pressure after Wuhan reported its first cluster of new infections since the lockdown was lifted.
Officials in China noted of a new cluster of coronavirus infections in the province of Jilin.
Pound New Zealand Dollar Outlook: Will Johnson’s 50-Page Plan Buoy GBP?
Looking ahead, the New Zealand Dollar (NZD) could edge lower against the Pound (GBP) if risk appetite suffers.
If China reports further coronavirus clusters this week, it will dampen risk sentiment and weigh on the risk-sensitive ‘Kiwi’.
Meanwhile, Prime Minister Boris Johnson is expected to present further details of the easing of the lockdown.
If optimism remains as the Prime Minister presents his 50-page document to parliament, the Pound New Zealand Dollar (GBP/NZD) could edge higher.