Pound Sterling New Zealand Dollar (GBP/NZD) Exchange Rate Rises as Coronavirus Weighs on Risk Appetite
The Pound Sterling New Zealand Dollar (GBP/NZD) exchange rate edged around 0.3% higher, with the pairing trading at around NZ$ 2.1005.
The New Zealand Dollar edged slightly lower against a handful of its rivals on Friday as investors await the US jobs data. This afternoon’s US non-farm payrolls will reveal just how bad the jobs market in the world’s largest economy is becoming.
The ‘Kiwi’ also remained under pressure as the impact of the coronavirus pandemic on the global economy is becoming more obvious.
Commenting on the recent movement of NZD, Kiwibank dealer, Mike Shirley said:
‘Relative to what we’ve seen over the last couple of weeks, it was very subdued.’
Meanwhile, weaker risk sentiment and a disappointing, record low UK PMI composite weighed on the Pound today. This prevented Sterling from making significant gains against NZD.
Britain’s PMI composite slumped to 36 in March, down from an earlier flash estimate of 37.1, and February’s reading of 53.
Commenting on this, vice president of market risk solutions at Silicon Valley Bank, Sam Cooper said:
‘The historically low reading in composite PMI could weigh heavily on Sterling in the short-term.
‘However [it] is unlikely to have a long term impact if the same weakness is observed globally. The Pound’s rollercoaster ride against the dollar is likely to continue as the global pandemic and central bank stimulus measures continue to drive direction.’
UK ‘Almost Certain’ to Experience ‘Deep’ Recession
The Pound remained largely flat against the ‘Kiwi’ after data from Markit revealed the British service sector suffered its largest slump since the survey began in 1996.
The country’s highly-watched sector saw a sharp drop in new work, and widespread job cuts as the survey posted at a weak 34.5 in March.
This reading exceeded the previous record low that was seen during the height of the global financial crisis.
The survey respondents attributed the lower demand in the sector to the ongoing coronavirus pandemic, which has caused a fall in consumer spending and slump in business confidence.
Commenting on this morning’s data, Markit’s Economics Director, Tim Moore noted:
‘A record slump in UK service sector activity reported in March adds to the increasingly bleak economic statistics seen recently across the developed world. Emergency public health measures to combat the COVID-19 pandemic continue to mothball business operations, force aggressive cutbacks on non-essential expenses and trigger distress for household finances.
‘With the UK economy now almost certain to experience a deep contraction in the second quarter of the year, perhaps the most important aspect of the Services PMI to watch for hopeful signs will be any recovery in the business expectations sub-index from the record low seen in March.’
Pound New Zealand Dollar Outlook: Construction PMI and Business Confidence in Focus
Looking ahead to Monday morning, the Pound (GBP) could suffer some losses against the New Zealand Dollar (NZD) following the release of further UK PMI data.
If Britain’s construction sector slides further into contraction in March, Sterling will slump.
Meanwhile, the ‘Kiwi’ could be left under pressure following the release of NZIER Q1 business confidence data.
If business confidence plummets further than expected in the first three months of 2020, the Pound New Zealand Dollar (GBP/NZD) exchange rate will remain largely flat.
International Money Transfer? Ask our resident FX expert a money transfer question or try John’s new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.
TAGS: Pound New Zealand Dollar Forecasts