Pound Sterling New Zealand Dollar (GBP/NZD) Muted as Coronavirus Death Toll Nears 2,600
The Pound Sterling New Zealand Dollar (GBP/NZD) exchange rate remained flat, trading at around NZ$ 2.0404.
The New Zealand Dollar remained flat amidst growing concern about the spread of Covid-19 as other countries such as South Korea, Italy and Iran began to battle outbreaks.
The outbreaks resulted in lockdowns and travel restrictions in all three countries.
China has reported around 77,000 cases of coronavirus, and there have been close to 2,600 deaths. Meanwhile, there have been 1,200 cases in 26 other countries, with over 20 deaths.
Markets are looking at how quickly the virus will spread and will be forced to rethink the economic impact.
In a note, Barclays analysts wrote:
‘The market reaction to the coronavirus appears to be evolving, beginning to differentiate the currencies vulnerable to the virus from the rest.’
Commenting on NZD exchange rates, dealer at Kiwibank, Mike Shirley said:
‘We came back in again and corona took control again and that’s where we’ve traded all day.’
Sterling (GBP) Flat Ahead of Budget and UK-EU Trade Negotiations
Monday saw the Pound stumble, as coronavirus fears caused investors to move away from assets in favour of the safety of the US Dollar.
Many analysts view the American economy as largely well-shielded if the Covid-19 outbreak should hurt global economic growth.
The Pound was able to make gains after stronger-than-expected British data and the belief the new Chancellor will announce more spending in next month’s budget.
However, these gains were capped by worries about UK-EU trade negotiations and broad Dollar strength.
Commenting on this, ING analysts wrote in a research note:
‘A quiet week in terms of data releases is going to leave space to the other two key drivers of GBP: UK-EU trade negotiations and hints about the content of the upcoming UK budget.
‘We suspect both will hardly come to the support of the Pound, as the negotiations may enter an even more confrontational phase and the government is unlikely to endorse market’s high fiscal hopes.’
Pound New Zealand Dollar Outlook: Will Covid-19 Worries Send NZD Lower?
Looking ahead, the New Zealand Dollar (NZD) could slump against the Pound (GBP) if risk appetite continues to decline.
If traders continue to worry about the risk the Covid-19 outbreak will turn into a pandemic, the risk-sensitive ‘Kiwi’ will slide.
Meanwhile, Sterling could suffer some losses as traders anticipate UK-EU trade talks.
If reports continue to reveal the UK and Brussels remain far apart on key issues, this will leave the Pound New Zealand Dollar (GBP/NZD) exchange rate flat.
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TAGS: Pound New Zealand Dollar Forecasts