Pound New Zealand Dollar Exchange Rate Rallies Above NZ$2.00
The Pound New Zealand Dollar (GBP/NZD) exchange rate has cleared a key barrier of resistance today, with the pairing passing NZ$2.00 for the first time in over 10 months.
At the time of writing the GBP/NZD exchange rate is trading at around NZ$2.0021, up roughly 0.3% from this morning’s opening rate.
Pound (GBP) Buoyed by Brexit and Coronavirus Optimism
The Pound (GBP) is trending higher against the New Zealand Dollar (NZD) today, amidst positive Brexit headlines and coronavirus developments in the UK.
On the Brexit front GBP investors have welcomed the announcement that the EU has suspended legal action against the UK for its violation of the Northern Ireland protocol.
An EU spokesperson reportedly told Euronews:
‘In order to provide the necessary space to reflect on these issues and find durable solutions to the implementation of the Protocol, we have decided, at this stage, not to move to the next stage of the infringement procedure.’
It’s hoped that the pause in legal proceedings will help to ease tensions between the two sides, after the UK’s Brexit minister, David Frost called for an overhaul of the protocol last week.
Also helping to bolster the appeal of the Pound today is the UK’s recent run of positive coronavirus statistics.
New cases have now surprisingly fallen for seven consecutive days, prompting a 40% drop in coronavirus cases over the past week, and bolstering hopes
New Zealand Dollar (NZD) Undermined by Risk-Off Trade
At the same time, the New Zealand Dollar is struggling to attract support today as a cautious market mood sees investors shy away from the risk-sensitive ‘Kiwi’.
The risk-off mood comes amidst growing concerns over the resurgence in coronavirus cases in many parts of the world and the uncertainty this is casting over the global economic recovery.
In addition, investors are wary over China’s recent regulatory crackdown, which rocked equity markets earlier this week.
Further limiting market risk appetite is the Federal Reserve’s upcoming rate decision, with investors seeking to limit their exposure to volatility ahead of the key data event.
Pound New Zealand Dollar Exchange Rate Forecast: Coronavirus Developments to Remain in Focus
Looking ahead, it seems likely that coronavirus headlines will continue to act as a key catalyst of movement in the Pound New Zealand Dollar exchange rate. This could see the pairing maintain its positive trajectory so long as global cases continue to climb.
However, the Pound may be vulnerable if domestic cases begin to creep up again, as is expected once the effects from the 19 July reopening start to feed through into the data.
Potentially providing some support for the ‘Kiwi’ later tonight will be the publication of New Zealand’s latest business confidence figures, which are expected to report an improvement of business morale in July.