Risk-sentiment has already seen multiple shifts this week. While hopes of fresh economic stimulus in major economies are keeping the relatively risky New Zealand Dollar appealing today though, the Pound is still climbing.
Investors are buying the Pound in reaction to some surprisingly strong UK job market data, despite coronavirus concerns underlying seemingly optimistic figures.
A seemingly amicable tone in the latest round of Brexit negotiations is also helping the Pound to hold advance attempts today.
Last Week: Coronavirus and Brexit Jitters Prevent Pound Recovery
Global risk-sentiment was weaker last week, as fears of a possible ‘second wave’ of coronavirus infections rose.
This made some investors sell risk-correlated currencies like the New Zealand Dollar from recent highs. However, GBP/NZD was unable to register gains despite ‘Kiwi’ losses.
Concerns over the UK government’s handling of the coronavirus pandemic and Brexit, as well as Bank of England (BoE) concerns, kept a lid on the Pound’s appeal.
Three Things to Watch For This Week
- Brexit Developments
This week’s round of UK-EU Brexit negotiations appears to have had a more optimistic start. If UK and EU leaders boost hopes that a Brexit deal can be made in the coming months, the Pound will find more solid support.
- New Zealand Growth Report
Investors will get a better idea of New Zealand’s underlying economic strength from Thursday’s data. New Zealand is recovering from the coronavirus pandemic, but investors will be less optimistic if New Zealand’s economic resilience is unexpectedly weak.
- Bank of England (BoE) Decision
Thursday will see the Bank of England (BoE) hold its anticipated June policy decision. If the bank shows any signs that negative interest rates are possible, the Pound will see further weakness.
Coronavirus developments will continue to drive risk-sentiment and the New Zealand Dollar. Meanwhile, Pound investors look to Brexit negotiations and Bank of England (BoE) news.