GBP NZD Exchange Rate Gains Limited as Risk-Sentiment Persists
While the Pound Sterling to New Zealand Dollar (GBP NZD) exchange rate has rebounded on Brexit hopes today, its gains are limited. Uncertainty persists in the Brexit outlook, and the New Zealand Dollar (NZD) remains appealing due to improving market sentiment.
Last week was a bearish week for the Pound (GBP) as no-deal Brexit fears intensified. GBP/NZD fell from 1.9065 to 1.8669 throughout the week.
Since markets opened this morning, GBP/NZD has been attempting to rebound. At the time of writhing GBP/NZD trends closer to the level of 1.8887, still almost two cents below last week’s opening levels.
Unless there is Brexit progress soon, the Pound’s (GBP) outlook will only worsen.
Pound (GBP) Exchange Rate Rebound Limited as Brexit Outlook Tenses
The UK and EU have confirmed that Brexit negotiations will be extended beyond last week’s self-imposed deadline.
This has once again boosted market confidence that a deal is a more likely outcome than no-deal. It is making the Pound more appealing today.
However, investors are also concerned about the possibility of a no-deal Brexit. This is causing Pound volatility and could mean the currency moves sharply depending on the outcome of talks.
For now, the uncertainty in the Brexit outlook will keep Sterling volatile.
New Zealand Dollar (NZD) Exchange Rates Avoid Losses amid Market Sentiment
Improving market optimism over coronavirus vaccine news and hopes for a global economic recovery next year are keeping risk and trade-correlated currencies like the New Zealand Dollar more appealing.
Coronavirus recovery hopes have also boosted demand for commodities, which further supports currencies like NZD.
The Pound is rebounding today, but the resilience of the New Zealand Dollar amid this optimistic market sentiment is limiting GBP/NZD gains.
What’s more, the New Zealand Dollar outlook is fairly optimistic overall due to New Zealand’s perceived strong handling of the pandemic.
Pound to New Zealand Dollar (GBP/NZD) Exchange Rate Could Struggle Without Brexit Progress
The Pound outlook remains mixed, as the longer Brexit negotiations go on for the less likely a UK-EU deal looks.
Sterling is rebounding slightly on hopes a deal is close, but with only half a month until the end of the transition period it could quickly lose these gains again without solid negotiation progress.
UK-EU Brexit negotiations will remain the focus for Pound investors and the GBP/NZD exchange rate in the coming sessions as a result. Focus is only likely to intensify until some kind of outcome becomes clearer.
Tomorrow will also see the publication of Britain’s November job market report. While this will likely be overshadowed by Brexit, strong data could buoy the Pound slightly.
As for the New Zealand Dollar, it is likely to remain appealing. So long as coronavirus vaccine hopes persist and commodities are strengthening, the Pound to New Zealand Dollar exchange rate outlook will remain under pressure.