The Pound to New Zealand Dollar (GBP/NZD) exchange rate has struggled for direction since markets opened this morning as the Bank of England’s (BoE) Financial Stability Report pointed towards coronavirus as a risk to economic recovery.
The New Zealand Dollar could be open to losses today as a lack of notable data limits any meaningful gains, more so if the global market mood becomes more cautious NZD exchange rates would struggle.
Last Week: Sterling Stumbles Over Lockdown Easing Concerns
At the start of last week the Pound had found itself broadly appealing against many of its major rivals as positive PMI figures from the UK bolstered the appeal of Sterling.
Though throughout the week a lack of economic data paired with concerns over the UK government’s lockdown easing plans caused the Pound to stumble against the New Zealand Dollar.
A quieter economic week for the New Zealand Dollar saw movement in the currency driven by the global market mood which had at first remained cautious as global coronavirus cases surged.
Towards the end of last week a weakening US Dollar and a more upbeat market mood allowed the ‘Kiwi’ to head higher before the weekend.
The GBP/NZD pairing ended the week trending in a mixed range as the expansion of the UK’s economy during May limited any major NZD gains.
Three Things to Watch for This Week
- Coronavirus Developments
The GBP/NZD pairing will continue to be driven by any further coronavirus developments in the coming days, whilst Prime Minister Boris Johnson last night announced that the final UK lockdown is to go ahead on the 19th July, global coronavirus cases continue to surge.
- Inflation Data
Mid-week will see the release of the latest UK inflation rate figures for June which could provide support to Sterling if consumer prices have edged up to 2.2% as forecast. New Zealand will see their own inflation data release on Thursday which is forecast to have softened to 0.3% during the second quarter of 2021.
- UK Employment Change
Pound investors will keep an eye on the UK’s employment change figures which are forecast to show the UK labour market added 90k jobs during April as more of the UK’s economy opened from coronavirus restrictions.
A slightly busier economic week for the New Zealand Dollar could see movement driven more by the Reserve Bank of New Zealand (RBNZ) interest rate decision mid-week, along with inflation rate figures, though the global market mood will stay a key influence in driving movement in NZD exchange rates. A busier week for Sterling will see movement driven by a range of data alongside any further coronavirus developments as England prepares for ‘freedom day’.