‘Second wave’ coronavirus fears continue to worsen, but the risk-correlated New Zealand Dollar continues to see strong movement. In fact, due to broad Pound weakness and today’s concerning UK growth data, the Pound to New Zealand Dollar (GBP/NZD) exchange rate is on track to end Q2 2020 near its worst levels all year.
Last Week: Brexit Fears Keep the Pound Down
GBP/NZD spent much of last week trying to climb higher, as fears of a ‘second wave’ of coronavirus infections knocked risk-sentiment and the New Zealand Dollar.
However, coronavirus fears also hurt the Pound, due to concerns over how Britain’s government is handling the pandemic.
On top of this, fears over how the Brexit process will unfold, potentially with a no-deal outcome, left the British currency even more broadly unappealing. Even though risk-sentiment weakened last week, GBP/NZD ultimately ended the week lower.
Three Things to Watch Out for This Week:
The coronavirus pandemic and the possibility of a ‘second wave’ remain the primary focus for markets. Unless Britain’s outlook improves, the Pound is unlikely to strengthen.
As June comes to an end, more solid data for Britain’s economic activity over the month is due towards the end of the week. Weaker than expected PMIs could make the Pound even weaker.
The New Zealand Dollar is often correlated to market trade sentiment. If global trade fears ramp up due to the coronavirus pandemic, this could weigh heavily on the New Zealand Dollar.
Amid a lack of New Zealand data due in the coming days, the Pound to New Zealand Dollar exchange rate is most likely to react to coronavirus developments, though UK data may also cause movement.