May 1, 2020 - Written by John Cameron
STORY LINK Trump’s Retaliatory Measures Against China Buoyed the Pound New Zealand Dollar (GBP/NZD) Exchange Rate
Pound Sterling New Zealand Dollar (GBP/NZD) Exchange Rate Rises as UK Past the Peak
The Pound Sterling New Zealand Dollar (GBP/NZD) exchange rate edged -0.5% higher this morning, leaving the pairing trading at around NZ$2.0654.
Sterling rose against the New Zealand Dollar this morning as on Thursday, Prime Minister Boris Johnson said the UK was now past its peak of the coronavirus pandemic.
Johnson noted that the government would set out a ‘comprehensive plan’ for reopening next week but warned against a second spike of the virus.
Meanwhile, US President Donald Trump said that the hard-fought trade deal between the US and China was now of secondary importance to the Covid-19 pandemic.
The ‘Kiwi’ was left under pressure as the Trump administration crafted retaliatory measures over the pandemic.
Two anonymous US officials said that a range of options against China were being considered, but warned these discussions were in the early stages.
One of the sources noted:
‘There is a discussions as to how hard to hit China and how to calibrate it properly.’
Sterling (GBP) Rises despite Manufacturing’s ‘Abrupt Nosedive’
Sterling was able to continue to make gains against the New Zealand Dollar despite data showing the UK manufacturing sector fell further into contraction.
Coronavirus continued to play a major role in causing huge disruptions and damaging manufacturing supply chains. This sent the PMI plummeting from 47.8 in March to 32.6 in April.
Business sentiment also weakened, remaining close to record lows which likely limited some of Sterling’s gains.
Commenting on this morning’s data, Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply said:
‘Last month’s dismal predictions became a reality in April as the manufacturing sector took an abrupt nosedive into the red with purchasing activity, production and new orders falling at the fastest rates in the near 30-year survey history.
‘There was only one reason for such a ruinous result – the COVID 19 coronavirus pandemic which affected supply chains from beginning to end. Domestic customers deferred orders and export customers thrashed around trying to source a dwindling number of raw materials to keep their supply chains operating before finally giving up. Complicated by government edicts terminating normal business activity, UK companies were forced to put factories on lockdown anyway bringing their operations to a complete stop.’
‘There is no comparable time in history to make predictions against but as production ramps up again in the Far East, the sector remained optimistic that in a year’s time the operating environment will resemble some new normality.’
Pound New Zealand Dollar Outlook: Will Boris Johnson Announce Plans to Ease the Lockdown?
Looking ahead, the New Zealand Dollar (NZD) could suffer further losses against the Pound (GBP) following the release of ANZ’s Roy Morgan Consumer Confidence.
If consumer confidence tumbles more than forecast, it will dampen sentiment in the ‘Kiwi’.
Meanwhile, Sterling could make gains if Prime Minister Boris Johnson announces the UK’s ‘comprehensive plan’ to begin easing coronavirus lockdown measures.
If the Prime Minister reveals the government’s plans to begin easing the lockdown and re-opening the economy, it will send the Pound New Zealand Dollar (GBP/NZD) exchange rate higher.
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