GBP/NZD Gains Limited as Riskier Currencies Firm Ahead of US Presidential Debate

The Pound to New Zealand Dollar (GBP/NZD) exchange rate continued its advance attempts yesterday, but today has seen the pair slide back from highs. Investors are buying the relatively risky New Zealand Dollar from lows ahead of tonight’s anticipated US Presidential Debate. Meanwhile, UK coronavirus and Brexit uncertainties weigh on Sterling.

Last Week: Market Risk-Aversion Leaves GBP/NZD Surging

Investors piled into the Pound to New Zealand Dollar exchange rate last week. The Pound was able to benefit as market risk-aversion and Reserve Bank of New Zealand (RBNZ) easing bets left investors selling the New Zealand Dollar.

Global coronavirus cases worsened, making investors hesitant to take risks. On top of this, there have been rising bets that the RBNZ could introduce negative interest rates.

Sterling, meanwhile, was a little stronger due to market hopes that the UK would not face a stricter second national lockdown.

Three Things to Watch For This Week

  1. US Presidential Debate

Tonight’s American session will see US President Donald Trump and Democratic Challenger Joe Biden go head to head in the first televised debate of the 2020 Presidential Election. If the debate leads to more election uncertainty, market risk-sentiment could weaken again.

  1. UK Growth Rate

Tomorrow will see the publication of Britain’s final Q2 growth rate results. These will give investors a clearer idea of how resilient Britain’s economy has been amid the coronavirus pandemic.

  1. Brexit Developments

The UK and EU are holding the final round of scheduled Brexit negotiations this week. Any hopes of a last-minute breakthrough or deal could lead to a surge in Pound demand.

GBP/NZD Outlook

The Pound to New Zealand Dollar exchange rate’s movement is likely to depend on political surprises, such as with the US Presidential Debate or Brexit negotiations, in the coming sessions.

Josh Jeffery

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