Pound New Zealand Dollar Exchange Rate Still Trending Near 4-Month-Peaks on Weak NZD

Pound New Zealand Dollar Exchange Rate Holds Near Best despite GBP Weakness 

Despite broad weakness in the Pound (GBP) this week, the Pound New Zealand Dollar (GBP/NZD) exchange rate continues to trend near its best levels in months. The New Zealand Dollar (NZD) has been throttled by this week’s shift in central bank speculations. 

GBP/NZD has seen a lot of narrow and mixed movement in recent weeks. Last week the pair opened and closed the week in the interbank region of 1.93, without big movement. 

This week though, GBP/NZD has seen a sharp rise in demand as the Pound capitalises on a New Zealand Dollar selloff. 

In the middle of the week, GBP/NZD trended near an interbank high of 1.96. This was the best level for GBP/NZD in over four months, since late-October. At the time of writing, GBP/NZD is trending close below those highs. 

For now, investors are awaiting key UK retail sales results data due for publication tomorrow. 

Pound (GBP) Exchange Rates Steady but Bullishness Still Limited 

Investors have been hesitant to buy the Pound this week. Fresh tensions between the UK and EU over the issue of coronavirus vaccine exports, combined with weaker than expected UK inflation data, has offset some of the Pound’s recent strength. 

Still, a lot of the recent UK data has continued to show strong performance from Britain’s economy. 

UK job market and PMI data this week both beat expectations, showing that major aspects of Britain’s economy were holding up better than expected against the coronavirus pandemic. 

The Bank of England (BoE) also continues to show general optimism about Britain’s economy. According to BoE Chief Economist Andy Haldane: 

’My sense is that the economic recovery will come quickly…people are desperate to get out and spend.’ 

New Zealand Dollar (NZD) Exchange Rates Remain Weak after New Zealand Housing News 

The big story this week for the New Zealand Dollar has been New Zealand’s announcement that it will take big action to rein in the nation’s heating house market.  

It weighed on market speculation that the Reserve Bank of New Zealand (RBNZ) would take more hawkish stances on monetary policy any time soon. 

This has offset recent market optimism about New Zealand’s economic performance. According to Imre Speizer, Head of NZ Strategy at Westpac: 

‘Implications for the NZ economy from the announced housing curbs are likely to be negative, taking the shine off the NZ economic outperformance story.’ 

Pound New Zealand Dollar (GBP/NZD) Exchange Rate Could Tumble if UK Retail Sales Disappoint 

Friday will see the publication of one of this week’s most influential UK ecostats. Britain’s February retail sales results could cause a big shift in the Pound’s movement if it surprises investors. 

If Britain’s consumer and retail sector were weaker than expected last month, it could cause fresh concerns that the nation is struggling more than expected from the currency coronavirus lockdown. 

This could cause new Pound weakness. If the New Zealand Dollar’s own movement steadies, GBP/NZD could fall on poor UK data. 

The New Zealand Dollar remains unappealing as markets move away from speculation of a more hawkish Reserve Bank of New Zealand (RBNZ). 

However, the New Zealand Dollar has already seen huge losses this week. As a result, the currency could steady or even recover slightly as markets adjust positions. 

Essentially, UK retail data and coronavirus developments could influence any potential late-week movement in the Pound New Zealand Dollar (GBP/NZD) exchange rate. 

Josh Jeffery

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