Pound New Zealand Dollar Exchange Rate Continues its Climb despite Risk-On Movement

Pound New Zealand Dollar Exchange Rate Struggles as Sterling Rally Pauses 

The Pound New Zealand Dollar (GBP/NZD) exchange rate is still climbing today, but its gains are limited. Investors are hesitant to keep buying the Pound (GBP) too much as it continues to be repriced. 

The volatile GBP/NZD pair has been especially volatile over the past few weeks as both currencies attempt to strengthen. Last week saw GBP/NZD open at the interbank level of 1.90 and briefly touch a half-month-low of 1,88 before rebounding and closing above the week’s opening levels. 

This week’s movement has been mixed as well. After an early-week dip, GBP/NZD is trending above the interbank rate of 1.91 at the time of writing on Wednesday. 

Pound (GBP) Exchange Rates Struggles amid Softer Bullishness 

The Pound has been rallying in recent weeks. Investors have been buying the British currency as Britain’s coronavirus vaccination programme is further ahead than those of other major economies. 

Sterling remains appealing this week so far, so it is still seeing fairly strong performance that is helping it to avoid losses against the New Zealand Dollar. 

However, some factors have been limiting the Pound’s appeal. AstraZeneca’s coronavirus vaccine has seen less effectiveness against some newer strains of the virus. On top of this, there are fresh concerns about UK-EU trade difficulties in the post-Brexit era. 

Ahead of upcoming comments from Bank of England (BoE) Governor Andrew Bailey, markets are hesitant to buy the Pound too much. 

New Zealand Dollar (NZD) Exchange Rate Appeal Limited by RBNZ’s Housing Jitters 

The New Zealand Dollar (NZD) is a risk and trade-correlated currency. It is often more appealing in times of market optimism. 

As a result, a combination of coronavirus recovery hopes and strong New Zealand data have been keeping NZD buoyed lately. 

Stronger than expected New Zealand inflation expectations data has been seen as a sign of resilience in New Zealand’s economy. Some analysts speculate that the Reserve Bank of New Zealand (RBNZ) could be among the first major central banks to start hiking rates again. 

However, the RBNZ has been expressing concern over risks in New Zealand’s housing market. This is dampening the New Zealand Dollar’s appeal against other risk-correlated currencies, which is making GBP/NZD gains easier as well. 

Pound New Zealand Dollar (GBP/NZD) Exchange Rate Awaits BoE Governor Speech 

Investors are hesitant to make big moves on either the Pound or New Zealand Dollar for now, but the second half of the week will be a big more eventful for news. 

This evening, Bank of England (BoE) Governor Andrew Bailey will be holding a speech. While a shift in tone so soon after the bank’s latest decision is unlikely, his tone will still be closely watched. 

Any signs of comments or signals on negative interest rates, for example, could influence the Pound. If Bailey hints that negative rates are off the table, the Pound may be in for further bullishness. 

The rest of this week’s notable data will be published on Friday. 

Friday’s Asian session will see the publication of New Zealand business PMI data and food inflation stats from January. 

The European session will follow with the week’s influential UK ecostats. This includes trade balance, production, business investment and growth rate results from December and Q4 2020. 

Weaker than expected UK growth data could offset much of the Pound’s recent bullishness and cause fresh losses in the Pound New Zealand Dollar (GBP/NZD) exchange rate. 

Josh Jeffery

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