The Pound to New Zealand Dollar (GBP/NZD) exchange rate has been trending with an upside bias since markets opened this week. The risky trade-correlated New Zealand Dollar is pulling back slightly from its best levels, but remains appealing as market sentiment continues to gradually improve.
Sterling is gaining on hopes that a Brexit deal is close, but persisting uncertainty is keeping it from rising too much.
Last Week: No-Deal Brexit Fears Leave Pound Rivals Rallying
After weeks of hopes that a UK-EU Brexit deal was close, a lack of progress in negotiations finally hit the Pound last week. Markets became concerned that UK and EU negotiations had run out of time and a no-deal Brexit was becoming more likely.
This made it easier for a strong New Zealand Dollar to push GBP/NZD lower.
The New Zealand Dollar has been appealing on market risk-sentiment, as coronavirus vaccine and US fiscal policy hopes rise.
Three Things to Watch For This Week
- Brexit Developments
A UK-EU Brexit deal could be reached in days, but talks could collapse within days too. Once again, Brexit developments will be the main cause of Pound movement.
2. New Zealand Growth Rate
New Zealand’s key Q3 growth rate report will be published during Thursday’s Asian session. If it beats expectations, the New Zealand Dollar could strengthen further.
3. Bank of England Policy Decision
The Bank of England (BoE) will hold its December policy decision on Thursday. If the bank is more dovish than expected due to Brexit and coronavirus uncertainties, the Pound may see further pressure.
The Pound to New Zealand Dollar exchange rate’s movement will remain dominated by Brexit developments. The New Zealand Dollar will remain appealing overall, so GBP/NZD gains are unlikely without optimistic Brexit news.