Pound to New Zealand Dollar (GBP/NZD) Exchange Rate Rises as Covid-19 Second Wave Fears Drag Down ‘Kiwi’

July 7, 2020 - Written by John Cameron

STORY LINK Pound to New Zealand Dollar (GBP/NZD) Exchange Rate Rises as Covid-19 Second Wave Fears Drag Down ‘Kiwi’

GBP/NZD Exchange Rate Edges Higher as Hopes Grow on Brexit Talks

The Pound to New Zealand Dollar (GBP/NZD) exchange rate rose by 0.4% today, with the pairing currently trading around NZ$1.91.

Sterling rose today on rising hopes of a possible breakthrough in UK-EU trade negotiations after Monday saw reports that negotiations were preparing ‘landing zones’ for more difficult aspects of post-Brexit talks.

Meanwhile, markets are keeping a close eye on Chancellor Rishi Sunak ahead of tomorrow’s Treasury’s Summer Economic Update. Any signs of fresh fiscal stimulus – which is highly likely – would further buoy the Pound on hopes for Britain’s economic recovery.

Today also saw the release of the UK’s Halifax house prices index for June, which beat forecasts and rose from -0.2% to -0.1%.

Halifax managing director Russell Galley commented on the report:

‘Though only a small decrease, it is notable as the first time since 2010 – when the housing market was struggling to gain traction following the shock of the global financial crisis – that prices have fallen for four months in a row.’

The European Commission has also included a gloomy forecast for the UK’s economy, with the EC saying that it expects Britain’s GDP to shrink by 10%. The EC also stated that the risks to the UK economy were ‘predominantly to the downside’.

New Zealand Dollar (NZD) Falls as Risk Sentiment Dips on Covid-19 Second Wave Fears

The New Zealand Dollar (NZD) failed to benefit from today’s better-than-expected Global Dairy Trade (GDT) Price Index today. While the figure rose from 1.9% to 8.3%, investors have become more wary about New Zealand’s economic recovery.

New Zealand’s Finance Minister Grant Robertson said that the economy is coming back ‘quicker than people expected’ but it was ‘not out of the woods yet’.

NZD traders have also been looking to Australia after it was announced that Melbourne would undergo a further six-week lockdown after an outbreak of new Covid-19 cases. As a result, ‘Kiwi’ traders are feeling notably anxious about the possibility of a second wave hitting the New Zealand economy.

Meanwhile, NZD investors have been keeping a close eye on America’s coronavirus cases. With the number of cases increasing in the world’s largest economy, ‘Kiwi’ traders are remaining cautious.

US-China tensions are also weighing on market risk-appetite today.

GBP/NZD Outlook: Could Post-Brexit Trade Progress Boost Sterling?

Pound (GBP) investors will be looking ahead to tomorrow’s release of the RICS Housing Price Balance figure for June. Any signs of improvement could buoy the GBP/NZD exchange rate.

NZD traders look be looking ahead to Thursday’s release of New Zealand’s electronic card retail sales figures for June. Any increase in spending last month could benefit the ‘Kiwi’.

Risk sentiment will also continue to drive the NZD/GBP exchange rate this week. Any signs of a possible second wave of coronavirus cases would prove NZD-negative.

The GBP/NZD exchange rate could continue to edge higher this week if UK-EU post-Brexit negotiations show any signs of progress.

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: New Zealand Dollar Forecasts Pound New Zealand Dollar Forecasts