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Pound to New Zealand Dollar (GBP/NZD) Exchange Rate Edges Higher Despite Fears of 1980s-level of UK Unemployment

June 30, 2020 - Written by John Cameron

GBP/NZD Exchange Rate Edges Higher as Boris Johnson Outlines ‘Ambitious’ Economic Recovery Plan

The Pound to New Zealand Dollar (GBP/NZD) exchange rate rose by 0.2% today, with the pairing currently trading around NZ$1.92.

Sterling benefited from cautious optimism after the Bank of England’s Chief Economist, Andy Haldane, said that the UK economy is looking at a V-shaped recovery in the near-term.

However, Haldane also warned about the UK facing 1980s-levels of unemployment, which has left many Pound investors concerned for Britain’s economic recovery.

Mr Haldane commented:

‘Both the UK and the global economies are already well into the “second quarter” – the recovery phase. The UK’s recovery is more than two months old, while the global economy is perhaps three months into its recovery, in both cases from an exceptionally low starting point.’

Meanwhile, Prime Minister Boris Johnson set out an ‘ambitious’ economic recovery plan today, vowing to ‘build, build, build’ to soften the economic impact of Covid-19.

Mr Johnson added:

‘We don't yet know what the full economic impact is going to be... [but] we will do everything we can to get this economy moving.’

New Zealand Dollar (NZD) Falls as NZ Business Confidence Remains in Doldrums

The New Zealand Dollar (NZD) struggled today after this morning’s release of the ANZ Business Confidence figure for June remained in the doldrums at -34.4.

ANZ chief economist Sharon Zollner commented:

‘New Zealand with a closed border is a significantly smaller economy, at least in the near term, and the recession is just starting to make itself felt.’

‘The outlook for the labour market is of particular concern at the moment, with the pressures from the loss of international tourism particularly pronounced for people-centric industries of tourism, hospitality and retail.’

However, with risk-off market mood dragging down the risk-sensitive ‘Kiwi’, the NZD/GBP exchange rate has remained subdued today.

As fears of a possible second-wave of coronavirus cases across the world continues to increase, NZD traders are remaining markedly cautious.

Any further signs that the global economy could be slowed down by an increasing number of Covid-19 cases, then we could see the NZD/GBP exchange rate further suffer.

GBP/NZD Outlook: Could an Improving UK Manufacturing Sector Boost the Pound?

Pound (GBP) traders will be looking ahead to tomorrow’s release of June’s UK Markit Manufacturing PMI. Any signs of improvement in the UK’s manufacturing sector would prove Pound-positive.

Meanwhile, Brexit negotiations between the UK and the EU will remain in focus this week. If trade talks appear to be going well, we could see the Pound head higher as hopes of a UK-EU trade deal grow.

The New Zealand Dollar (NZD) will remain sensitive to risk sentiment this week. Any further signs of coronavirus cases across the Europe, China, or the United States would weigh on global markets and sink the risk-averse ‘Kiwi’.

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