GBP/NZD Nears Monthly Best as Investors Avoid Risks

As it became clearer that US Congress would not be able to reach a fiscal stimulus deal, the Pound to New Zealand Dollar advanced more easily. Investors sold the risk-correlated New Zealand Dollar after yesterday’s resilience. However, the Pound outlook remains mixed due to persisting Brexit uncertainty.

Last Week: Brexit Developments and Safe Haven Demand in Focus

The Pound and New Zealand Dollar have both seen increasingly mixed movement over the past week or so.

UK-EU Brexit negotiations see huge uncertainty, with UK officials saying talks are essentially over but EU officials saying they are ongoing. This is keeping the Pound from capitalising on rival weakness.

The New Zealand Dollar, on the other hand, has been unable to advance much amid market aversion to risk and trade-correlated currencies. This was due to US fiscal stimulus doubts, as well as US political uncertainty and the worsening global coronavirus pandemic.

Three Things to Watch For This Week

  1. Brexit Developments

The UK and EU continue to hold talks this week, though UK officials have said negotiations are virtually over unless the EU softens its position on certain conditions. This means big Brexit developments could have a huge impact on the Pound.

  1. UK and New Zealand Inflation Rate

UK inflation is due tomorrow, with New Zealand inflation due on Friday. Amid the coronavirus pandemic these figures may not be hugely influential however.

  1. UK Retail Sales and PMIs

Friday will see the publication of most of this week’s noteworthy UK ecostats. UK retail sales results and PMI projections could influence the Pound outlook if they surprise investors.

GBP/NZD Outlook

While some noteworthy ecostats are due later in the week, the Pound to New Zealand Dollar exchange rate is likely to remain focused on potential shifts in Brexit speculation and global risk-sentiment.

Josh Jeffery

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