GBP/NZD Exchange Rate Edges Higher as Markets Seek Safe-Haven Refuge
The Pound New Zealand Dollar exchange rate edged higher by 0.5% today as the risk- sensitive ‘Kiwi’ struggles with investors panicking and taking refuge in the safe-haven US Dollar.
The GBP/NZD exchange rate is currently fluctuating trading around NZ$2.041.
Hamish Pepper, an analyst at Harbour Asset Management, said that the coronavirus had ravaged risk appetite for the New Zealand Dollar. Mr. Pepper added:
‘We’ve moved away from some of those dynamics that we might’ve talked about that were supporting the [New Zealand Dollar], such as relative interest rates and the terms of trade.’
‘New Zealand has always had some reliance on global funding and I guess, in times of stress, those who provide funding to New Zealand will demand greater reward for that and a lower currency is one way of doing that.’
The New Zealand (NZD) fell after the nation’s coronavirus cases increased by 8, bringing the total up to 28 cases as the NZ Government steps up to ban gatherings of more than 100 people.
Yesterday saw NZD fall to an 11-year low against the US Dollar in the wake of a global sell-off of risky assets like the ‘Kiwi’ and the Australian Dollar. However, with the Covid-19 pandemic set to continue, it’s unlikely that the New Zealand Dollar will see any significant return of sentiment in the coming days.
Pound to New Zealand Dollar Exchange Rate Rises, BoE Promises Fresh Stimulus Measures
The Pound (GBP) edged higher against the weakened ‘Kiwi’ after the Treasury and the Bank of England (BoE) promised fresh stimulus measures to reduce the impact of the coronavirus on the British economy.
Andrew Bailey, the new Governor of the BoE, said:
‘We want to minimise the economic disruption and don’t want a persistent effect that destroys the supply capacity of the economy.’
The BoE’s Monetary Policy Committee (MPC) are now expected to cut interest rates from 0.25% to a record low of 0.1% and initiate a quantitative easing program when they meet next week.
However, after yesterday saw Sterling fall to 35-year against the US Dollar (USD) the turmoil for the British economy shows no signs of abating. The Pound saw its lowest point against the US Dollar at around $1.1471.
GBP/NZD Outlook: ‘Kiwi’ to Struggle on Risk-Off Market Mood
We should expect further volatility for the GBP/NZD exchange rate, with the Pound likely to shed some of its gains along the way.
The New Zealand Dollar (NZD) will likely remain under pressure as markets continue to seek out refuge in safe-haven currencies. Any signs of alleviating risk-aversion would benefit the highly sensitive ‘Kiwi’.
However, with downside risks increasing for the global economy investors will remain wary of the risk-sensitive New Zealand Dollar (NZD).