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Pound to New Zealand Dollar (GBP/NZD) Exchange Rate Steady as UK Covid-19 Cases Show Signs of Stabilising

May 21, 2020 - Written by John Cameron

GBP/NZD Exchange Rate Rangebound Despite Weak UK PMI Data

The Pound to New Zealand Dollar (GBP/NZD) exchange rate held steady today, with the pairing currently trading around NZ$1.99.

Sterling benefited from news that the UK’s number of coronavirus cases had remained stable, according to the Office for National Statistics (ONS).

The ONS said in its report that the snapshot findings of 137,000 cases between 4-17 May was slightly down from the previous fortnight.

These were slightly down from the 27th April to 10th May figures, a result which the ONS said was ‘relatively small and it should be interpreted that the number of people in England that have Covid-19 is relatively stable.’

In UK economic news, today saw the release of the preliminary UK Services PMI figure for May. However, this remained deeply lodged in contraction territory, despite a better-than-expected result of 27.8.

Duncan Brock, the Group Director at CIPS, commented:

‘As the sectors prepare for a further easing in restrictions and becoming covid-ready for staff to return, the danger on the horizon is a second wave of infections threatening the health of the nation and dampening consumer confidence still further.’

New Zealand Dollar (NZD) Steady as US-China Trade Tensions Rise

The New Zealand Dollar (NZD) failed to gain on the Pound (GBP) today after US-China tensions flared up again. This follows comments from US President Donald Trump, who criticised Beijing’s handling of the coronavirus crisis, and accused the country of using ‘disinformation and propaganda.’

With China being New Zealand’s largest trading partner, this has notably weighed on the risk-averse ‘Kiwi’ as investors become concerned for the NZ economy in the coming months.

Meanwhile, Paul Bloxham of HSBC Australia was positive about New Zealand’s lockdown efforts, commenting:

‘We think both economies are going to be in a position where GDP will be lower than it would have been without the crisis, both economies are going to suffer mainly from the border closures.’

‘If you compare where Australia and New Zealand are at compared with the rest of the Western world, it's actually extraordinarily positive.’

Today saw the release of the NZ Credit Card Spending figure for April, which plummeted from -9.4% to 49.4%. As a result, ‘Kiwi’ traders are remaining cautious as the New Zealand economy continues to throw off the economic impact of the coronavirus pandemic.

GBP/NZD Outlook: Could Soaring UK Public Borrowing Data Weaken Sterling?

New Zealand Dollar (NZD) investors will be keeping a close eye on trade relations between the US and China for the rest of this week. However, any signs of relations between the two superpowers deteriorating would prove NZD-negative.

The Pound (GBP) could continue to rise if the UK’s coronavirus situation improves. However, any further complications – or rises in the number of coronavirus cases – would weaken Sterling.

Meanwhile, Sterling traders will be awaiting tomorrow’s release of the Public Sector Borrowing figure for April. If this confirms consensus and soars to £35 billion, then we could see the GBP/NZD exchange rate suffer.
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