A brief dip has not been enough to keep the Pound to New Zealand Dollar (GBP/NZD) exchange rate from trending near its best levels in two months since markets opened this week. Hopes for a better UK handling of the coronavirus pandemic, as well as market risk-aversion, are keeping GBP/NZD buoyed.
Last Week: Global Coronavirus Panic Intensifies
After months of hopes that the global economy could rebound from the coronavirus pandemic, last week’s news left markets panicked that the pandemic’s global impact may be worse than previously thought.
Amid continued signs that the US was being hit especially hard by the virus, the Pound capitalised on weakness in the US Dollar (USD).
Worsening coronavirus fears also hit market risk-sentiment. Currencies commonly correlated to risk and trade, like the New Zealand Dollar, were hit lower as a result.
NZD was also hurt by fears over Australia’s coronavirus situation. This is due to the close relations between New Zealand and Australia’s economies.
Three Things to Watch For This Week
- New Zealand Job Market Report
Wednesday’s Asian session will see the publication of New Zealand’s key Q2 job market results. They will show markets how New Zealand unemployment was hit by the coronavirus pandemic. If unemployment worsens more than expected, NZD could slump.
2. Bank of England (BoE) Policy Decision
The Bank of England (BoE) will hold its anticipated August policy decision on Thursday. If the bank hints at looser monetary policy or negative interest rates, the Pound could shed much of its recent gains.
3. Coronavirus Developments
The risk-correlated New Zealand Dollar could see stronger support if there are any optimistic developments in the global coronavirus crisis.
The Pound to New Zealand Dollar exchange rate could plunge if the Bank of England (BoE) becomes more dovish on Thursday. However, deeper coronavirus fears could keep markets risk-averse and keep GBP/NZD buoyed.