GBP/NZD Exchange Rate Rangebound as Hopes of Return to Normality Warm UK Markets
The Pound to New Zealand Dollar (GBP/NZD) held steady today. The pairing is currently fluctuating around NZ$1.919 following encouraging news of another successful Covid-19 vaccine trial from the United Kingdom.
Oxford’s AstraZeneca announced today that its latest Covid-19 vaccine trial had proven an up to 90% efficacy.
British Health Secretary Matt Hancock said that the vaccine means that life in Britain could ‘start to get back to normal’ after Easter.
Mr Hancock said:
‘The bulk of the vaccine rollout programme will be in January, February, March, and we hope that sometime after Easter things will be able to start to get back to normal.’
As a result, UK markets have reacted positively to the news, with hope now growing that the British economy could begin to make a steady recovery in the months ahead.
Nevertheless, today saw the release of the flash UK Services PMI for November. This fell into contraction territory from 51.4 to 45.8.
The UK Manufacturing PMI for November, however, beat forecasts and remained relatively strong at 55.2.
Duncan Brock, the Group Director at CIPS, was upbeat in his commentary, however, saying:
‘News of potential vaccines bringing a return to normality lifted the mood with a big rise in optimism to its highest since March 2015. But in the meantime, with service businesses still shedding jobs at a head-spinning rate, the New Year will be difficult as another recession waits on the doorstep.’
New Zealand Dollar (NZD) Steady as China’s Economy Improves
The New Zealand Dollar failed to edge higher against Sterling today despite largely positive Chinese economic data, which saw an unexpected surge in third quarter retail sales.
As a result, confidence in New Zealand’s economy has risen as the nation relies heavily on trade with China, the world’s second-largest economy.
Today also saw news that the US President-elect, Joe Biden, had vowed to ‘reinvigorate’ US-New Zealand ties following a phone call wit NZ Prime Minister Jacinda Arden.
Mrs Arden commented:
‘I offered to him and his team access to New Zealand health officials in order to share their experience on things we’ve learnt on our Covid-19 journey.’
Meanwhile, hopes for the New Zealand economy have also received some uplift following today’s positive Covid-19 vaccine news.
Nonetheless, uncertainty over New Zealand-China relations have dampened demand for the risk sensitive ‘Kiwi’.
Could Hopes of a Global Rollout of the Covid-19 Vaccine Boost ‘Kiwi’?
Pound traders will be eyeing tomorrow’s speech from the Bank of England’s (BoE) policymaker Jonathan Haskel.
Any downbeat commentary about the British economy would prove GBP-negative.
Conversely, however, the Covid-19 vaccine news could influence a more bullish outlook from the BoE.
Consequently, we could see Sterling benefit if the Bank is notably more optimistic in its analysis of the British economy going forward.
We could see the New Zealand Dollar head higher this week if Covid-19 vaccine news remains positive.
As a result, the GBP/NZD exchange rate could begin to fall if demand for the risk-sensitive ‘Kiwi’ rises on hopes of a global roll out of a coronavirus vaccine.