GBP/NZD Exchange Rate Sinks as Easing Covid-19 Cases Boost Risk Appetite
The Pound to New Zealand Dollar (GBP/NZD) exchange rate fell by -0.9% today, with the pairing currently trading around NZ$ 2.07.
The New Zealand Dollar (NZD) rose against its peers today because of an upwards surge in risk sentiment, with coronavirus cases leveling off both in Europe and China, while the US faces its ‘peak’ surge this week.
Joshua Mahony, a Senior Market Analyst at IG, commented:
‘With a decline in daily mortality rates across the likes of France, Italy, and New York, we are seeing some optimism that the current restrictions could be shorter than many had previously speculated. However, without a cure or vaccine, any easing on the current restrictions would likely short-term in nature, sparking a likely surge in cases before long.’
‘Kiwi’ investors will be awaiting this evening’s publication of the NZIER Business Confidence report for the first quarter. However, with the gauge expected to fall due to the coronavirus outbreak, we could see the New Zealand Dollar begin to shed some of its gains against Sterling.
GBP/NZD Exchange Rate Sinks as UK Construction Sinks Deeper into Contraction
The Pound (GBP) struggled against the ‘Kiwi’ following this morning’s release of the UK Construction PMI for March, which fell more deeply into contraction territory than expected at 39.3.
Tim Moore, Economics Director at IHS Markit, was downbeat in his analysis of the report:
‘March data provides an early snap-shot of the impact on UK construction output from emergency public health measures to halt the COVID-19 pandemic, with activity falling to the greatest extent since the global financial crisis.’
Meanwhile, the Pound (GBP) has been beleaguered by fears over Prime Minister Boris Johnson’s after he was admitted to hospital following his recent coronavirus diagnosis.
Nevertheless, these fears are beginning to recede as the PM is expected to return to Downing Street shortly.
Sterling also suffered from today’s release of March’s GfK Consumer Confidence report which fell to a worse-than-expected -34, its sharpest fall in over 45 years.
Analysts at Reuters commented:
‘Economists fear Britain’s economy, like many others around the world, is heading for a severe recession but say a bounce-back is possible later in the year, depending on how the coronavirus outbreak develops.’
GBP/NZD Forecast: Could the ‘Kiwi’ Fall as Dairy Prices Plummet?
New Zealand Dollar (NZD) investors will be awaiting tomorrow’s release of the NZ Global Dairy Trade Index. Any signs of deterioration in New Zealand’s largest commodity likely to clip some of the ‘Kiwi’s gains.
The GBP/NZD exchange rate will continue to be driven by coronavirus developments this week, with any indications of an up-tick in cases of the virus weighing on the Pound as the nation continues to battle its domestic outbreak.
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