The Pound New Zealand Dollar exchange rate held steady today as rising US-China tensions has weighed on demand for the risk-sensitive ‘Kiwi’. Asia-Pacific US Trade Representative Katherine Tai said that the trade relationship between the world’s two largest economies has become ‘unhealthy’ and ‘imbalanced’.
What’s Been Happening: UK Delta Variant Fears Weigh on Pound
The GBP/NZD exchange rate dipped last week as concerns over the Delta coronavirus variant dampened confidence in the reopening and final easing of lockdown measures on 21 June.
Despite Prime Minister Boris Johnson saying that there was no evidence to delay England’s reopening, rising numbers of Covid-19 left many Sterling traders more cautious about the nation’s planned reopening.
Last week also saw the release of the UK manufacturing PMI for May, however, which fell slightly below consensus but continue to perform strongly last month thanks to the easing of the UK’s lockdown restrictions.
Meanwhile, the New Zealand Dollar fluctuated on mixed risk sentiment as rising Covid-19 numbers and Australia’s extension of some lockdown measures limited the appeal of risky assets like the ‘Kiwi’.
Nevertheless, New Zealand Prime Minister Jacinda Arden said that New Zealand’s economy was now ‘outperforming Australia economically’.
Three Things to Watch Out for This Week
- UK Covid-19 Developments
Pound traders will continue to monitor the UK’s Delta variant situation this week. If cases continue to rise, then GBP could suffer from concerns over a possible delay to further easing of lockdown measures this month.
- NZ Business PMI
New Zealand Dollar investors will monitor Thursday’s release of the latest Business NZ PMI. Any signs of a recovering economy would be NZD-positive.
- US-China Trade Developments
The New Zealand Dollar could suffer this week, however, if US-China trade tensions show any further signs of souring
Pound New Zealand Dollar Forecast
The GBP/NZD exchange rate could head higher this week if the Government indicates that it will stick to its plan to fully ease lockdown restrictions on 21 June.