GBP/NZD Exchange Rate as UK Retail Sales Fall in April
The Pound to New Zealand Dollar (GBP/NZD) exchange rate dipped by 0.1% today after UK government borrowing hit a record high of £62 billion in April. The pairing is currently trading around NZ$1.99.
Sterling suffered as UK public finances were revealed to be under heavy strain from the nationwide lockdown. Meanwhile, the Office for National Statistics (ONS) said the economic strain would be felt over the coming months as the nation continues to tackle the coronavirus crisis.
Today also saw the release of the UK’s latest retail sales report for April, which plummeted to a worse-than-expected -18.1%.
Jeremy Thomson-Cook, the Chief Economist at Equals, commented on the data:
‘Coronavirus has put the high street in stasis and the reopening of shopping centres and areas will take a huge amount of time and planning with no guarantee of a full recovery. Online fulfilment will remain crucial given shoppers may have the ability to return to shops soon but the desire to physically turn up will likely be lacking.’
As a result of today’s data, Pound (GBP) investors have remained anxious about Britain’s economy going forward. Furthermore, with the UK’s coronavirus situation still ongoing, Sterling traders are generally worried that the UK could face a worse-than-expected recession this year.
New Zealand Dollar (NZD) Rises on Hopes of ‘Helicopter Money’ to Bolster NZ Economy
The New Zealand Dollar (NZD) edged slightly higher against the Pound (GBP) as the ‘Kiwi’ benefited from hopers that the New Zealand economy could recover faster-than-expected.
Today also saw news that New Zealand’s Prime Minister, Jacinda Arden, could consider ‘helicopter money’ to further stimulate the New Zealand economy. This would include distributing free money directly to individuals to stimulate the economy reeling from the coronavirus pandemic.
However, US-China trade tensions are holding back some of the New Zealand Dollar’s gains today. This follows US President Donald Trump’s persistent criticism of China’s handling of the coronavirus crisis.
With China being New Zealand’s largest trading partner, this has caused concern for New Zealand’s economy going forward.
Meanwhile, last night saw the release of New Zealand’s retail sales report for the first quarter, which fell from 0% to -0.7%.
Karen Hicks, the retail manager at Stats NZ, commented:
‘These falls may continue into the June 2020 quarter, with a record fall in monthly electronic card sales already reported for April, as many businesses went into hibernation because of the Covid-19 lockdown.’
GBP/NZD Outlook: Could Weak UK Consumer Confidence Drag on Sterling Next Week?
New Zealand Dollar (NZD) investors will be looking ahead to Monday’s release of the NZ trade date for April. If the New Zealand economy continues to stagger, we could see the ‘Kiwi’ begin to fall.
The Pound (GBP) traders will be looking ahead to next Thursday’s release of the UK’s GfK consumer confidence report for May. However, if this confirms forecasts and plummets to -40, then we could see the GBP/NZD exchange fall further.the
The GBP/NZD exchange rate will continue to be dictated by risk-sentiment. If US-China trade tensions escalate, we could likely see the risk-averse ‘Kiwi’ suffer.