GBP/NZD Exchange Rate Falls as NZ Business Confidence Improves
The Pound to New Zealand Dollar (GBP/NZD) exchange rate dipped today, with the pairing currently trading around NZ$1.97.
The New Zealand Dollar (NZD) benefited from a better-than-expected ANZ Business Confidence report for May, which edged higher from -66.6 to -41.8
Today also saw May’s ANZ Activity Outlook report rise from -55.1% to -38.7%. As a result, ‘Kiwi’ investors have become increasingly hopeful that the New Zealand economy could continue to improve.
ANZ Chief Economist Sharon Zollner described the lessening of negative sentiment as a glimmer of light at the end of a long tunnel.
Mrs Zollner explains:
‘Reducing virus cases to negligible levels sharply reduces a huge downside risk for businesses, but it’s clear that very tough times nonetheless lie ahead.’
Meanwhile, the risk-sensitive New Zealand Dollar has continued to benefit from risk-on market mood, with much of the Eurozone economy reopened following the peak of the coronavirus pandemic.
In New Zealand economic data, this evening will see the release of the ANZ Roy Morgan Consumer Confidence data for May. However, if this continues to fall we could see the NZD/GBP exchange rate dip.
Pound (GBP) Dips Despite Downing Street’s Defence of Dominic Cummings
The Pound (GBP) dipped today despite political uncertainty over Prime Minister Boris Johnson’s chief aide, Dominic Cummings, has eased off. This follows Durham police’s statement that, while Cummings had breached lockdown rules, the case would require no further actions.
Downing Street also defended Mr Cummings in a statement today:
‘The police have made clear they are taking no action against Mr Cummings over his self-isolation and that going to Durham did not breach the regulations. The prime minister has said he believes Mr Cummings behaved reasonably and legally given all the circumstances and he regards this issue as closed.’
However, the UK’s economic uncertainty has remained in focus after Bank of England (BoE) Governor Andrew Bailey warned that Britain’s economic recovery could be slower than previously expected.
Today saw the Office for National Statistics (ONS) announce that 24% of UK businesses currently on pause would restart next month, while 31% of businesses are expected to begin trading in just over 4-weeks’ time.
As a result, Sterling traders have become more optimistic over the prospect of an improving UK economy going forward.
GBP/NZD Forecast: New Zealand Dollar Could Rise on Buoying Risk Sentiment
The New Zealand Dollar (NZD) will continue to be driven by risk sentiment this week. However, if there’s any signs of US-China trade tensions escalating, we could see ‘Kiwi’ fall as risk sentiment sours.
Meanwhile, ‘Kiwi’ investors will be keeping a close eye on the global economy. Any further signs that countries could reopen and begin to recover their economies would prove NZD-positive.
The GBP/NZD exchange rate will continue to be driven by Brexit and coronavirus factors this week. As a result, we could see Sterling suffer if UK-EU relations fails to improve ahead of next months trade negotiations.