Pound to New Zealand Dollar Exchange Rate Struggles to Advance amid Risk-Sentiment
The Pound to New Zealand Dollar (GBP/NZD) exchange rate has been unable to sustain much of a recovery this week so far. Investors continue to buy the New Zealand Dollar (NZD) as a risk-correlated currency.
Following last week’s GBP/NZD plummet from 1.9900 to 1.9467, movement has been more mixed this week. GBP/NZD attempted to climb yesterday, but currently trends just above the week’s opening levels again.
Ultimately, GBP/NZD appears to still be far from recovering much of the four-cent-loss seen last week.
Risk-on movement is keeping the ‘Kiwi’ gaining. On top of this, investors are optimistic about New Zealand’s outlook regarding the coronavirus pandemic.
Pound (GBP) Exchange Rate Limited by Combined Uncertainty over Coronavirus and Brexit
In recent sessions, the Pound (GBP) has benefitted somewhat from risk-sentiment. However, compared to the New Zealand Dollar (NZD) is has been unable to capitalise.
This is due to persisting domestic uncertainty. Opinion over the UK government’s plans to handle the coronavirus pandemic have been mixed, and Brexit fears are also returning this month.
It comes as the latest round of Brexit negotiations ends with no notable progress being made. Analysts expect that progress is unlikely before July at the earliest.
Some analysts are especially concerned about the combined impact of coronavirus and Brexit on Britain’s economy. According to Carolyn Fairbairn, Director-General of the Confederation of British Industry:
‘For businesses, jobs and economic confidence in this most challenging of years, this would be a shocking outcome,
For many firms fighting to keep their heads above water through the crisis, the idea of preparing for a chaotic change in EU trading relations in seven months is beyond them.’
New Zealand Dollar (NZD) Exchange Rates Sturdy as New Zealand Beats Coronavirus
Even after a brief dip in risk-sentiment at the beginning of the week, the New Zealand Dollar (NZD) is holding its ground.
NZD is avoiding notable losses, as the latest coronavirus developments have markets optimistic about New Zealand’s outlook.
New Zealand has been without a new case for weeks, and the final case cleared up over the past week. As a result, the government plans to reopen the economy on all levels except flights.
As a result, while New Zealand data has been mixed, investors hopeful for an economic rebound in New Zealand are happy to keep buying the ‘Kiwi’.
Today’s news that New Zealand manufacturing sales contracted at –1.9% in Q1 was concerning. However, this was not enough to put investors off from finding appeal in the risk-correlated New Zealand Dollar.
Pound to New Zealand Dollar (GBP/NZD) Exchange Rate Looks to Economic Developments
While investors are still buying risk-correlated currencies on hopes for an economic rebound, this run may be limited without further support.
New Zealand confidence and business data will be published on Friday, which could give investors a better idea of how New Zealand’s economy has been performing during the height of the pandemic.
If the data beats forecasts, the New Zealand Dollar (NZD) is more likely to hold its ground.
On the other hand though, if the global coronavirus situation worsens again, risk-sentiment could fade and the New Zealand Dollar could take a hit.
The Pound (GBP) is likely to be driven by both domestic coronavirus and Brexit developments.
Pound to New Zealand Dollar (GBP/NZD) exchange rate movement may also be influenced by a slew of key UK data on Friday.