The Pound New Zealand Dollar (GBP/NZD) exchange rate has been tumbling since markets opened this week. Amid a lack of fresh developments in UK or New Zealand outlooks, it comes largely as markets continue to digest recent shifts in sentiment.
Though the Pound remains appealing, Sterling’s rally is running out of steam. This is making it easier for the New Zealand Dollar to push GBP/NZD back down from near its best levels, as the New Zealand Dollar benefits from higher market appetite for risk-taking.
Last Week: Mixed Risk-Sentiment as Pound Rally Slows
Demand for the relatively risk and trade-correlated New Zealand Dollar was mixed last week. It was driven largely by big movements in its safe haven rival the US Dollar.
As the US Dollar was sold from a rally towards the end of the week, the New Zealand Dollar strengthened and pushed GBP/NZD back down from the week’s highs.
Sterling, on the other hand, fell more easily against NZD in the second half of last week as its recent rally finally showed signs of slowing. Britain’s recovery from the coronavirus pandemic is still going according to forecasts, but there have been no upside surprises in Britain’s outlook either.
Three Things to Watch For This Week
- New Zealand Growth Rate
The most notable release for the New Zealand Dollar this week will be New Zealand’s Q4 growth rate report, due during Thursday’s Asian session. Stronger than expected data could help the New Zealand Dollar strengthen further.
- Bank of England (BoE) Policy Decision
The Bank of England will hold its March policy decision on Thursday. If the bank continues to be optimistic about Britain’s economic recovery chances, the Pound is more likely to sustain recent strength.
- Coronavirus Developments
As Britain’s economy gradually reopens from the third coronavirus pandemic lockdown, any surprise rises in infections could cause Pound weakness. Surprise developments in New Zealand’s coronavirus situation could be influential to the New Zealand Dollar as well.
While Pound to New Zealand Dollar exchange rate trade lacks drive for now, New Zealand growth data and Bank of England (BoE) growth data towards the end of the week could cause some big movement in the pair’s outlook.