Pound New Zealand Dollar (GBP/NZD) Exchange Rate Falls in Risk-On Trade
The Pound New Zealand Dollar (GBP/NZD) exchange rate is on the defensive this morning as market sentiment picks up.
At the time of writing the GBP/NZD exchange rate is trading around NZ$1.9261, which is roughly down 0.5% from this morning’s opening rate.
New Zealand Dollar (NZD) Gains Ground amid Shifting Market Mood
The New Zealand Dollar (NZD) is up against the majority of its peers this morning as investor risk appetite increases.
The uptick in market mood could be due to further rumours that China might be loosening its strict Covid policy.
Dr Guang Zeng, a former Chinese Centre for Disease Control and Prevention (CDC) senior official, caused hope amongst investors by saying he believes that ‘substantive changes’ should happen soon, hopefully ‘before spring’.
The news also appears to be fuelling an uptick in commodity prices this morning, which is also buoying the appeal of the ‘Kiwi’.
Pound (GBP) Mixed amid Weak Data Calendar Releases
The Pound (GBP) is trading in a broad range this morning amid the absence of any notable UK economic data.
Elsewhere, investors were largely focusing on the UK’s bleak economic outlook. After its interest rate decision yesterday the Bank of England (BoE) stated the UK was in recession. The central bank also predicts this downturn could last for up to two years.
This sent the Pound plummeting and whilst it is finding some support this morning it’s clear economic woes are capping Sterling’s gains.
In an interview with radio 4 this morning, former BoE governor Mark Carney warned of the tough road ahead for the UK’s economy:
‘As we all know, it’s a difficult period, and it will get tougher for the next few years. But, there is a prospect in the Bank’s judgement…. that inflation will be under control.’
Pound New Zealand Dollar Exchange Forecast: GBP to Trade on Economic Sentiment?
Looking ahead to next week the Pound New Zealand exchange rate could be driven by the market’s continued adjustment to fresh economic woes.
Data is thin on the ground in the UK early next week, so investors could focus more heavily on domestic headlines. Any news from the BoE or developments within the housing market could cause impetus for Sterling.
In the meantime, GBP investors could be waiting on a speech from BoE policymaker Huw Pill. If Pill’s Reaffirms the BoE’s grim outlook for the UK economy the Pound is likely to fall.
Turning to the New Zealand Dollar, a lull in data could see the currency move in line with risk appetite. Any further positive rumours about China’s economy could lift NZD.
Elsewhere, if global recession fears begin to weigh on market sentiment again the risk sensitive ‘Kiwi’ could face headwinds.