Pound Sterling New Zealand Dollar (GBP/NZD) Exchange Rate Slumps as Traders Focus on Reopening Economies
The Pound Sterling New Zealand Dollar (GBP/NZD) exchange rate edged -0.4% lower on Friday morning. This left the pairing trading at around NZ$1.9253.
The risk-sensitive ‘Kiwi’ rebounded at the end of the week as traders focused on the economic support measures and economies reopening. The bounce back in stocks pushed the New Zealand Dollar higher.
According to Tatsuya Chiba, manager of forex at Mitsubishi Trust Bank:
‘Stock prices remained supported but I doubt they could retain the current high valuations when more earnings results will come in next month. At this point, risk currencies could slip again versus the yen.’
The worsening coronavirus pandemic and huge increase in cases across the United States did little to stop NZD edging higher.
The worst-hit US states in the early stages of the pandemic such as New York continue to reopen their economies. However, states such as Texas, New Mexico and Florida have halted reopening.
New Zealand Dollar gains were likely limited after the country recorded one more case of the coronavirus today. As all recent cases, this was another traveller from overseas, bringing the total number of cases to 1,170.
Sterling (GBP) Falls as Brexit Pessimism Weighs
The Pound edged lower against the New Zealand Dollar on Friday morning as traders continued to worry about post-Brexit trade negotiations.
Doubt the country will be able to secure a trade deal have sent Sterling lower this week.
Added to this, after Prime Minister Boris Johnson’s announcement for further easing of the lockdown weighed on sentiment. Medical experts warned the easing measures to be introduced from 4 July could result in a second wave of the coronavirus.
Meanwhile, weak economic data revealed British car production slumped by an annual rate of -95% in May.
As the coronavirus crisis kept factories shut, only 5,314 vehicles were built, slightly recovering from a dire 197 cars built in April.
This weak data weighed on GBP and sent the currency lower against the ‘Kiwi’.
Pound New Zealand Dollar Outlook: GBP Traders Focus on Upcoming Brexit Negotiations
Looking ahead, the Pound (GBP) could extend this week’s losses against the New Zealand Dollar (NZD) next week.
Traders will be focused on the latest round of post-Brexit trade negotiations between Britain and the European Union.
If reports and officials from Brussels or London suggest the talks are unlikely to lead to any significant breakthroughs, Sterling will slide.
Meanwhile, risk appetite could improve as traders focus on the reopening of economies rather than the increase in cases. This would cause the Pound New Zealand Dollar (GBP/NZD) exchange rate to fall.