August 24, 2020 - Written by John Cameron
STORY LINK Pound New Zealand Dollar Exchange Rate News: GBP/NZD Bouyed as NZ PM Laments ‘Frankly Terrible Year’
New Zealand Dollar (NZD) Dented by Coronavirus Concerns
The New Zealand Dollar (NZD) opens this week on the back foot against the Pound (GBP) and majority of its other peers in light of concerns over New Zealand’s coronavirus situation.
Having recorded zero community transferred cases through the most of summer, New Zealand has found itself back in lockdown over the past couple of weeks amidst a sudden spike of new infections.
Speaking today, New Zealand Prime Minister Jacinda Ardern announced that lockdown measures in Auckland, the country's biggest city, will be extended for at least another week, as the country seeks to contain its outbreak again.
‘We know it's been tough. I know there are many who've found it harder this time. In a world where 2020 has frankly, been terrible, we are strong, we have been kind, and we are doing really well... if any one country knows how to bounce back, it is us.’
Included in this will be the requirement for masks to be worn on public transport.
‘If Covid can spread on a bus, and we know masks make a difference, let's wear masks’
Further limiting the appeal of the ‘Kiwi’ in early trade today was the publication of New Zealand’s latest retail sales index, after Stats NZ reported a record fall in domestic sales growth in the second quarter.
Pound (GBP) Subdued amidst Fears of Unemployment Cliff-Edge
At the same time, the Pound (GBP) is find only limited support today, amidst growing concern that the UK is facing an impending employment crisis.
From next week, businesses will need to start contributing toward the wages of employees' furloughed as part of the UK’s job retainment scheme.
From September the government will be covering 70% of wages, leaving employers to cover the other 10% to top it up to 80%.
Then from the start October this will become 60% from the government and 20% from employers, before the entire scheme is wrapped up at the end of that month.
While the furlough scheme has kept people employed through the coronavirus crisis, now that businesses are going to have to start covering wages, analysts are warning that redundancies are inevitable, with millions of people set to lose their jobs when the scheme ends in October.
GBP investors fear this surge in unemployment could severely slow the rate of the UK’s economic recovery as it curbs household spending and economic activity.
GBP/NZD Exchange Rate Forecast: Dip in NZ Trade Balance to Weigh on the ‘Kiwi’?
Looking ahead, the Pound to New Zealand Dollar (GBP/NZD) exchange rate could trend higher on Tuesday, with the publication of New Zealand’s latest trade figures.
This is expected to show a narrowing of the country’s trade surplus with a fall in exports, something which could limit the appeal of the ‘Kiwi’.
Meanwhile, the Pound remains threatened by Brexit uncertainty as the last round of talks ended in deadlock, with the EU's chief negotiator Michel Barnier warning that a deal ‘seems unlikely’, as stoking concerns the UK is hurtling towards a no-deal Brexit.
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TAGS: Pound New Zealand Dollar Forecasts