GBP/NZD Exchange Rate Holds Steady, Risk-Appetite Fades on Threat to Chinese Economy
The Pound New Zealand Dollar (GBP/NZD) exchange rate held steady this morning, with the pairing currently trading around NZ$2.01 as the risk-sensitive ‘Kiwi’ continues to be held back by rising concerns over China’s coronavirus outbreak.
However, after a number of major global manufacturers, such as Sony and Apple, were given the green light by Chinese authorities to resume production, market appetite for the risk-averse New Zealand Dollar has increased.
With China being New Zealand’s largest trading partner, worries that the virus could impact the world’s second-largest economy have, however, weighed on the ‘Kiwi’ today.
Shaun Roache, the Asia-Pacific Chief Economist at S&P Global Ratings, commented:
‘Most of the economic impact of coronavirus will be felt in the first quarter, and China’s recovery will be firmly in place by the third quarter of this year’.
However, as Chinese factories continue to close, markets remain jittery as it becomes increasingly difficult to assess the impact the virus’ outbreak will have one the Chinese economy in the near-term.
GBP/NZD Exchange Rate Rangebound, Coronavirus a ‘Serious and Imminent Threat’ to UK
The Pound (GBP) has also been held back by the UK’s announcement that the coronavirus presents a ‘serious and imminent threat’ to public health, raising concern that this could have a near-term negative impact on the British economy.
The Department for Health and Social Care stated:
‘The secretary of state declares that the incidence or transmission of novel Coronavirus constitutes a serious and imminent threat to public health, and the measures outlined in these regulations are considered as an effective means of delaying or preventing further transmission of the virus’.
Due to no notable UK economic data releases today, Pound movement is likely to be driven by news around the coronavirus and any further developments between the UK and the EU on future trade relations.
GBP/NZD Outlook: Could the ‘Kiwi’ Sink on Concerns for Global Economy?
Sterling investors will be looking ahead to tomorrow’s release of the UK’s preliminary GDP report for the fourth quarter, which is expected to flatline at 0%.
Any further signs of deterioration in the UK’s growth figure, however, would prove Pound-negative as the British economic outlook continue to darken.
Tomorrow will also see the release of December’s British industrial and manufacturing production figures, with any signs of an easing off in Britain’s industrial sector not boding well for the GBP/NZD exchange rate.
New Zealand Dollar investors, meanwhile, will be awaiting tomorrow’s publication of New Zealand’s REINZ House Price Index for January.
The Pound to New Zealand Dollar (GBP/NZD) exchange rate will, however, continue to be driven by news concerning China’s coronavirus outbreak, with any further signs of escalation potentially limiting the risk-sensitive ‘Kiwi’.