Pound Sterling New Zealand Dollar (GBP/NZD) Exchange Rate Slumps as UK Coronavirus Cases Jump to 798
The Pound Sterling New Zealand Dollar (GBP/NZD) exchange rate slumped by around -0.7%, leaving the pairing trading at around NZ$ 2.0415.
Sterling slumped at the end of the week as the UK’s measures announced following Boris Johnson’s Cobra meeting were widely criticized.
The UK has now moved from the ‘contain’ phase to the ‘delay’ phase, although the lack of stringent measures have been criticized.
The number of confirmed cases in the UK rose by 35% in a day to 798 and the death toll hit 10. Pound sentiment was left under pressure as health officials warned the actual number of those infected is likely to be between 5,000 and 10,000.
Ex-Health Secretary Jeremy Hunt has called for the government to enact more stringent measures. Speaking to BBC Newsnight, Hunt said the decision not to cancel large gatherings was ‘surprising and concerning’ when the UK has ‘four weeks before we get to the stage that Italy is at’.
European leaders have warned that this will get worse before it gets better and the US 30 day flight ban to Europe was a clear sign of an escalating crisis.
New Zealand Dollar (NZD) Rises as Markets Rebound from Yesterday’s Sell-Off
On Friday afternoon, the New Zealand Dollar rallied against a handful of currencies including the Pound.
London stocks rebound today after the recovery in oil prices and moves from central banks to limit the economic damage of coronavirus. Stocks were able to rebound after yesterday saw the worst sell-off since the 1987 ‘Black Monday’ crash a day earlier.
Meanwhile, an upbeat PMI reading from New Zealand provided NZD with an upswing of support.
February’s Business NZ PMI rose from an upwardly revised 49.8 to 53.2.
According to BNZ senior economist Craig Ebert, this may be the calm before the storm and added:
‘I guess a lot of people might have been expecting it to fall into clear contraction territory and basically it didn’t do that.
‘The big issue is where that index is going to be over the coming months and what it will represent and of course we’re conscious of downside but for the moment it’s holding up.
‘China really woke a lot of people up when its PMI proved to be far worse than what was expected. Everyone expected it to fall, but not nearly as far as it did.
‘On the other hand the PMI indices in Europe and America weren’t showing any real degree of contraction through the course of February, which again highlights that this is a moving feast.
‘I think we can all agree that a slowdown is upon us we’re just not sure of the extent and the duration of it.’
Pound New Zealand Dollar Outlook: Coronavirus in Focus
Looking ahead, the spread of the coronavirus pandemic is likely to be the main catalyst for movement in the Pound New Zealand Dollar (GBP/NZD) exchange rate.
If the cases worldwide continue to surge, risk appetite will decline and dampen sentiment in the risk-sensitive ‘Kiwi’.
Meanwhile, Sterling could receive some support on Tuesday following the release of better than expected labour market statistics.
If unemployment edges lower while wage growth increases at the start of the year, the Pound (GBP) will rise against the New Zealand Dollar (NZD).
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