GBP/NZD Exchange Rate Edges Higher as Outlook for UK Economy Significantly Improves
The Pound to New Zealand Dollar (GBP/NZD) exchange rate rose by 0.5% today after UK business confidence hit a 12-month high thanks to growing confidence in the nation’s economy. The pairing is currently fluctuating around NZ$1.94.
Kaley Crossthwaite, Partner at BDO LLP, commented:
‘With business lifelines extended in the shape of the prolonged furlough scheme, and an extra dose of support provided to hospitality via extensions in business rates relief and the VAT cut to 5%, there is reason to believe this optimism can be sustained as we gradually emerge from the depths of lockdown.’
Today also saw release of the YouGov’s latest consumer confidence data, which revealed that consumers are the most optimistic since the pandemic started.
As a result, the GBP/NZD exchange rate edged higher on renewed and growing confidence in the UK’s economic outlook.
Added to this, Covid-19 infections continue to drop, with the daily death rate down significantly at 82 – down -62 compared to last week.
The Bank of England’s (BoE) Governor, Andrew Bailey, also said that there was a growing sense of economic optimism but warned that the pandemic had shuck supply and demand in the economy.
‘There is a growing sense of economic optimism, in markets and in consumer and business confidence measures. The rate of new Covid infections is declining, and the vaccine programme is a huge achievement. There is light at the end of the tunnel.’
New Zealand Dollar (NZD) Sinks on Risk-Off Market Mood
The New Zealand Dollar (NZD) fell today owing to a general state of risk-off mood owing to a jump in US Treasury yields and weak Asian economic data.
Consequently, demand for the risk-sensitive ‘Kiwi’ is under pressure, with concerns that the global economy could be struggling.
Also, with China being New Zealand’s largest trading partner, this has spiked concerns for the nation’s economic recovery in the months ahead.
In more upbeat news, however, New Zealand has agreed to buy enough Pfizer vaccines to inoculate the entire population against the coronavirus.
Analysts at France24 commented:
‘[New Zealand’s Prime Minister Jacinda] Ardern said the decision to make Pfizer the country’s primary vaccine provider was taken after it was shown to be about 95% effective at preventing symptomatic infection.
‘New Zealand started its national rollout of the Pfizer-BioNTech’s Covid-19 vaccine last month and expects to inoculate its entire population by the end of the year.’
However, NZD investors are becoming more cautious despite the passing of the US $1.9 trillion stimulus plan.
The outlook for the global economy, despite dropping cases of Covid-19, is still largely uncertain.
GBP/NZD Forecast: Could Improving NZ Business Confidence Boost the ‘Kiwi’?
New Zealand Dollar investors will be looking ahead to tomorrow’s publication of March’s ANZ Business Confidence report.
If this points to a marked improvement in the outlook for New Zealand’s economy, however, we will see NZD head higher.
Risk-sentiment will continue to drive the NZD/GBP exchange rate. Any improvement in the outlook for the global economy, therefore, would be NZD-positive.
Pound investors will be monitoring tomorrow’s release of the latest retail sales data for February. Any improvement would boost Sterling.
The GBP/NZD exchange rate will likely continue to head higher this week as the outlook for the British economy improves.