GBP/NZD Exchange Rate Rises Following Downing Street’s Lockdown Exit Plan
The Pound to New Zealand Dollar rose today following the announcement that Prime Minister Boris Johnson was ‘very optimistic’ about the UK’s lockdown restrictions ending on 21st June. The pairing is currently fluctuating around NZ$1.93.
As a result, Sterling edged higher on renewed confidence in the UK economy now that Downing Street has presented its lockdown exit strategy.
Mr Johnson said:
‘There will be changes obviously as a result of the way the economy has been changing naturally. What we will do is continue to put our arms around everybody in the country to look after them throughout the pandemic, as we have.’
Today also saw the publication of December’s UK ILO Unemployment Rate, which rose by 5.1%.
The Guardian’s Economics Editor, Larry Elliott, commented:
‘On one reading of the latest unemployment figures, the UK labour market is in pretty good shape. The number of people being added to payrolls is going up and so is the number of job vacancies. Annual earnings growth is up sharply to 4.7%.’
‘An alternative reading is that the jobless total is going up along with the redundancy rate, while the number of people employed is going down.’
However, GBP investors are now more confident that easing lockdown restrictions will increase employment in the months ahead.
New Zealand Dollar (NZD) Falls Despite Upbeat Risk Sentiment
The New Zealand Dollar fell against the Pound today despite relatively upbeat risk sentiment. As a result, the ‘Kiwi’ has benefited from a resurgence of demand for riskier assets.
However, today’s New Zealand economic data has weakened the NZD/GBP exchange rate.
Today saw the publication of New Zealand’s Retail Sales data, which fell below forecasts by -2.7%.
ANZ senior economist Miles Workman was more optimistic about the data, saying:
‘The Q3 rebound out of lockdown was so strong, it set the hurdle very high to achieve further expansion in Q4.’
‘That said, another strong quarter alongside further recovery in other pockets could easily replace the negative sign with a positive one.’
Meanwhile, NZD investors are monitoring global Covid-19 case rates and news about the US stimulus package.
As a result, investors are remaining somewhat cautious around the risk-sensitive ‘Kiwi’.
GBP/NZD Forecast: Could Improving Risk Sentiment Boost the ‘Kiwi’?
Pound traders are awaiting tomorrow’s release of the Bank of England’s Monetary Policy Report Hearings.
Any bullish comments from the BoE would further buoy the GBP/NZD exchange rate.
NZD investors will be looking ahead to Wednesday’s announcement of the Reserve Bank of New Zealand’s (RBNZ) interest rate decision.
However, the RBNZ is expected to hold rates at 0.25%. Nevertheless, a dovish rate statement could prove NZD-negative on Wednesday.
The GBP/NZD exchange rate will continue to be driven by risk sentiment. If global Covid-19 rates fall and more countries rollout vaccinations, then the ‘Kiwi’ could begin to edge higher.