Pound to New Zealand Dollar (GBP/NZD) Exchange Rate Falls as New Zealand ‘Relatively Resistant’ to Covid-19 Shock

November 26, 2020 - Written by John Cameron

STORY LINK Pound to New Zealand Dollar (GBP/NZD) Exchange Rate Falls as New Zealand ‘Relatively Resistant’ to Covid-19 Shock

GBP/NZD Exchange Rate Dips as New Zealand Economic Situation Remains Strong

The Pound to New Zealand Dollar (GBP/NZD) exchange rate fell by -0.2% today, with the pairing currently trading around NZ$1.905.

The New Zealand Dollar (NZD) rose today following news that New Zealand’s economy had absorbed some of the shock of the coronavirus pandemic.

Wednesday saw the Reserve Bank of New Zealand (RBNZ), for example, explain New Zealand’s economy as being ‘relatively resilient’ to the crisis.

Consequently, demand for the ‘Kiwi’ remains high, with hopes of a Covid-19 vaccine rollout buoying demand for riskier assets and improving global risk sentiment.

US political stability has also contributed to the New Zealand’s Dollar strength this week after US President Donald Trump has allowed for the transition for President-elect Joe Biden.

In New Zealand economic news, today will see the release of November’s Roy Morgan Consumer Confidence report.

Any significant downturn in the outlook for New Zealand’s economic situation would prove NZD-negative.

Pound (GBP) Sinks as Most of England to Remain in Tier 2 in December

The Pound (GBP) fell today following news that most areas in England would remain in either Tier 2 or 3 following the easing of the national lockdown on December 2nd.

As a result, the outlook for the UK’s economy is growing increasingly darker, with uncertainty over Brexit and the Covid-19 crisis threatening to derail the economy going forward.

However, the European Commission’s President, Ursula von der Leyen, said that the European Union is now willing to act in a creative manner to reach a post-Brexit trade agreement with Downing Street.

Downing Street, however, appears to remain staunch in its position, and is showing no signs of conceding on several key issues.

Consequently, GBP traders are remaining cautious as a no-deal Brexit would seriously compromise the UK economy in 2021 and beyond.

Meanwhile, criticism of Chancellor Rishi Sunak’s Covid-19 rescue plan is increasing.

Torsten Bell, Chief Executive of the Resolution Foundation, commented:

‘The Covid crisis is causing immense damage to the public finances, and permanent damage to family finances too, with pay packets on track to be £1,200 a year lower than pre-pandemic expectations.’

GBP/NZD Outlook: Could Hopes of a Brexit Trade Agreement Buoy Sterling in the Weeks Ahead?

We could see the New Zealand Dollar (NZD) head higher in the week ahead if the Covid-19 vaccine rollout gets given the go ahead.

As a result, demand for risk-sensitive currencies would soar, with the ‘Kiwi’ likely climbing high against Sterling.

Meanwhile, Brexit developments will continue to drive the GBP/NZD exchange rate for the time being.

Sterling would head higher, however, if UK-EU Brexit talks take a positive turn towards a post-Brexit trade agreement.

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