GBP/NZD Exchange Rate Tumbles despite Pound’s Recent Strength
While the Pound (GBP) has seen a fairly bullish week so far, the Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate has been tumbling. The New Zealand Dollar (NZD) is capitalising as investors pull back on the Pound ahead of Bank of England (BoE) news.
The volatile GBP/NZD has seen highly volatile movement this week so far. Since opening the week at the interbank level of 1.90, GBP/NZD has jumped higher before plummeting lower again.
Yesterday, GBP/NZD plunged over a cent and the pair has been continuing to tumble since. This morning, GBP/NZD is trending near an interbank low of 1.88 – the worst level for the pair for almost a month, since early January.
Pound (GBP) Exchange Rates Down as Recent Bullishness Softens
For much of the past week, investors have been piling into the Pound. Optimism around Britain’s coronavirus vaccine rollout, combined with some stronger than expected UK data, helped the Pound to strengthen.
However, investors have been selling the British currency from its best levels since yesterday. The Pound’s bullishness softened as markets anticipated today’s Bank of England (BoE) policy decision.
On top of BoE uncertainty, the Pound is also being weighed by disappointing UK car sales data. The January print came in with a shocking contraction of –39.5%.
This is because the data indicated Britain’s latest lockdown was hurting more than the one seen in November.
New Zealand Dollar (NZD) Exchange Rates Continue to See Broad Appeal
The New Zealand Dollar has held against the Pound’s recent strength more easily due to the recently broad strength it has seen.
The New Zealand Dollar has been benefitting more from market risk-sentiment due to weakness in its rival the Australian Dollar (AUD).
New Zealand’s outlook remains strong and Reserve Bank of New Zealand (RBNZ) easing bets have largely faded.
This week’s New Zealand job market and building permits stats were much stronger than expected, showing persistent resilient strength in New Zealand’s economic activity.
Pound to New Zealand Dollar (GBP/NZD) Exchange Rate Volatility Likely to Persist
Despite the sharp Pound to New Zealand Dollar exchange rate losses since yesterday, there is still potential for the pair to rebound before markets close for the week.
If the Bank of England (BoE) takes a more hawkish tone, or indicates that negative interest rates won’t happen, the Pound could see another jump in demand through the end of the week.
While there will be no notable economic data published tomorrow, Pound investors will likely still closely watch tomorrow’s planned speech from BoE Governor Andrew Bailey.
Of course, developments in Britain’s coronavirus situation and vaccine progress will continue to influence the Pound as well.
The New Zealand Dollar, on the other hand, is likely to remain broadly appealing due to New Zealand’s strong handling of the pandemic and exceptional economic performance lately.
This means that if there are negative UK developments in the coming sessions, the Pound to New Zealand Dollar (GBP/NZD) exchange rate could continue to tumble instead.