July 20, 2020 - Written by Tim Boyer
STORY LINK GBP to NZD Exchange Rate Attempts Rebound Following Last Week’s Weakness
Despite higher market demand for risk-sentiment amid hopes for positive developments in the ongoing coronavirus pandemic, the British Pound to New Zealand Dollar (GBP/NZD) exchange rate rebounded today. A mixed global outlook for the coronavirus pandemic did weigh on risk-sentiment, while some investors looked to buy the Pound back from its cheapest levels after last week’s plummet on poor UK data.
GBP/NZD movement has been mixed lately, as investors are hesitant to buy the New Zealand Dollar much higher or sell the Pound much lower. Last week saw GBP/NZD fluctuate between lows of 1.9132 and highs of 1.9267, a region of just over a cent. However, GBP/NZD ultimately slipped from the level of 1.9222 to 1.9171 throughout the week, just around half a cent drop.
Since markets opened this week, movement has remained jittery. GBP/NZD briefly dipped to a new fortnight low of 1.9114 this morning, before rebounding and touching on weekly high of 1.9267 in the early afternoon.
Evidently, markets were hesitant to make any truly solid movements on either currency amid continuing coronavirus uncertainty.
GBP Exchange Rates Rebound but Gains are Limited
Last week saw the Pound dragged lower across the board. Even against fairly weak opponents, the Pound fell as markets digested Britain’s latest concerning growth rate results.
With Britain’s growth outlook amid the coronavirus pandemic much worse than expected, the Pound outlook slumped. UK inflation and job market data was not enough to improve things.
However, after last week’s losses, investors opted to buy the Pound back a little from its lows today.
Investors have been buying the Pound more easily thanks to concerns about the global coronavirus outlook.
On top of this, the Pound has also been benefitting from news that major progress on coronavirus vaccines is coming from UK companies. According to Yohay Elam, Analyst at FXStreet:
‘The good news comes from the medical front. Synairgen, a British company, reported positive results for a cure for COVID-19. While a full examination of its treatment is still awaited, the announcement already triggered a triplication of its shares and UK authorities could fast-track its application.
AstraZeneca, a large UK-based pharma firm, may announce results of another phase in its coronavirus vaccine candidate. The Lancet will likely publish an update later on Monday. Both developments are helping the Pound and supporting the broader market mood.’
NZD Exchange Rates Under Pressure amid Concerns Over Coronavirus Infections
The New Zealand Dollar has struggled to hold its ground today. This is despite market hopes for progress in a coronavirus vaccine, which would typically bolster risk-sentiment.
The New Zealand Dollar is a currency correlated to risk and trade. However it has been unable to keep climbing on coronavirus hopes due to concerns over the rising number of coronavirus infections in some major economies
The number of coronavirus infections in the US continues to surge. Following a rise in infections in Australia’s State of Victoria, there have also been fresh infections in Sydney.
Due to concerns over Australia and New Zealand’s close economic relations, the New Zealand Dollar has been hit by these concerns as well.
According to New Zealand Finance Minister Grant Robertson:
‘The economy is doing better than expected and is more open than anywhere else in the world,
… However, good progress in New Zealand is contrasted with the situation in the rest of the world,’
GBP/NZD Exchange Rate Forecast: Coronavirus Developments Remain in Focus
Some notable UK data due for publication tomorrow will be Britain’s June public sector net borrowing report. However, this is unlikely to cause much shift in the Pound to New Zealand Dollar exchange rate.
GBP/NZD is seeing mixed movement as investors buy the Pound on coronavirus vaccine hopes and in rebound from last week’s losses.
However, Sterling’s potential for gains is limited amid lingering concerns over Britain’s gloomy outlook.
Sterling is more likely to see stronger gains if there are any solid optimistic Brexit developments. Besides that though, investors may instead remain more focused on the coronavirus pandemic.
The New Zealand Dollar is more likely to see a solid rise in demand if Australia’s coronavirus situation improves or if vaccine hopes overshadow infection fears.
The Pound to New Zealand Dollar exchange rate may also be influenced by New Zealand trade data due later in the week.
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TAGS: Pound New Zealand Dollar Forecasts