Pound New Zealand Dollar Exchange Rate Gives Back Gains amid Mixed UK Outlook
The Pound New Zealand Dollar (GBP/NZD) exchange rate has been attempting advance this week, but gains have been limited. Investors are hesitant to keep buying the Pound (GBP) as uncertainty rises over the coronavirus pandemic and post-Brexit trade.
Last week saw GBP/NZD fluctuate broadly, but the pair ultimately closed the week higher in the interbank region of 1.90.
While GBP/NZD slipped earlier in the week, the pair has been climbing again since then. Yesterday, GBP/NZD touched on a three-month-high of 1.92, the best level for the pair since November 2020.
GBP/NZD has been falling from those highs since this morning and currently trends in the interbank region of 1.91 again.
This is still notably above the week’s opening levels so GBP/NZD could sustain gains if tomorrow’s UK data impresses.
Pound (GBP) Exchange Rates Dented by Vaccine and Brexit Uncertainties
For most of the past few weeks, investors have been buying the Pound en masse.
Speculation that Britain’s coronavirus vaccination programmes were further ahead than other major economies boosted hopes for Britain’s earlier economic recovery and made the Pound more appealing.
However, fresh uncertainty over the effect of existing vaccines on newer coronavirus strains is weighing on the Pound recently, making it harder for the British currency to hold its ground.
On top of this, there has been some fresh tension between the UK and EU over post-Brexit trade complications.
Bank of England (BoE) Governor Andrew Bailey this week urged the EU not to battle the UK on financial services.
New Zealand Dollar (NZD) Exchange Rates Appealing as New Zealand Confidence Rises
The New Zealand Dollar (NZD) is a risk and trade-correlated currency. It often benefits in times of market confidence.
As a result, rising hopes for global recovery from the coronavirus pandemic have helped the New Zealand Dollar lately.
On top of this, markets are optimistic about New Zealand’s own economic outlook. Recent New Zealand data continues to impress as New Zealand has effectively stamped down on the coronavirus pandemic.
According to Analysts at ANZ Bank:
‘The RBNZ will welcome this, but continue to highlight the need for cautious patience. Medium-term challenges to the outlook remain, and the RBNZ will need more assurance that its targets are firmly in view’
Pound New Zealand Dollar (GBP/NZD) Exchange Rate Awaits Key UK Growth Report
The Pound is not being driven much by economic data today, as the week’s economic calendar has been fairly quiet so far.
Friday will see the publication of most of this week’s key UK data however.
UK trade balance, business investment, production and GDP growth rate results from December and Q4 2020 will be published tomorrow morning.
If the UK growth report beats forecasts, it could boost hopes for Britain’s economic resilience amid the coronavirus pandemic and support the Pound.
However, weaker than expected UK growth stats could douse the Pound’s recent appeal and worsen the market’s UK outlook. This could make it harder for GBP/NZD to sustain this week’s advance attempts.
New Zealand business PMI and food inflation data will also be published tomorrow. The Pound New Zealand Dollar exchange rate is more likely to be influenced by UK data and shifts in global coronavirus developments however.