Pound / New Zealand dollar rate could be on the verge of correction

  • GBP / NZD may have peaked near 1.97
  • May be on the verge of a correction to near 1.94
  • With fears of a new variant of the virus in remission
  • On the signs of mild illness and the effectiveness of the vaccine

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The pound sterling exchange rate against the New Zealand dollar suffered its biggest intraday loss in more than a month ahead of the midweek session, a sign that it may have peaked after a rout in late November in world markets.

The British pound was down almost everywhere on Tuesday after making gains against the euro alone and a handful of other local currencies as European financial markets lagged in a global rebound in risky assets that looked to be expected. continue mid-week.

“The markets are reversing some of the omicron premiums accumulated over the past week,” notes Bipan Rai, head of foreign exchange strategy for North America at CIBC Capital Markets. “GSK reports that its C-19 antibody therapy is effective against omicron.”

The biggest boost in demand for risky assets and currencies has been a further ebb in market concerns about the threat posed by the latest mutated strain of the coronavirus following positive results from vaccine efficacy testing against the Omicron variant.

“Sotrovimab, an investigational monoclonal antibody, retains in vitro activity against the known spike Omicron protein, the novel variant of SARS-CoV-2 (B.1.1.529),” GlaxoSmithKline and Vir Biotechnology said in a joint announcement .

GBP to NZD per day

Above: GBP / NZD rate shown at daily intervals.

  • GBP / NZD reference rate at publication:
    Place: 1.9515
  • High bank rates (indicative band): 1.8832-1.8968
  • Payment specialists tariffs (indicative band): 1.9340-1.9417
  • Discover the specialized rates, here
  • Set up an exchange rate alert, here
  • Book your ideal rate, here

The pound sterling rate against the New Zealand dollar had previously hit early October highs, breaking noticeable technical resistance around 1.9608 en route before Tuesday’s price action appeared to trigger a decisive downward reversal.

This came as the rebound in risk-taking in the global market was primarily positive for commodity-linked currencies like the New Zealand dollar, which may also have benefited from a weakening on Tuesday. global dairy trade auction in which the prices of many Kiwi export products have increased to varying degrees.

The dairy auction follows widely reported remarks by Reserve Bank of New Zealand deputy governor Christian Hawkesby, who reportedly told the 2021 KangaNews Debt Capital Markets summit that a stronger New Zealand dollar would benefit the bank by helping to contain inflation.

It is rare for the RBNZ to encourage market enthusiasm for the Kiwi dollar, which had benefited all summer from the bank’s pivot towards a normalization of its interest rate policy which should greatly enhance the attractiveness of the yield of the New Zealand dollar for investors over the next several months.

“The NZD generally enjoys positive seasonality in December, but there is no sign of that at this time,” said David Croy, strategist at ANZ, writing in a Tuesday morning research briefing to clients.

07 December NZD

Above: NZD / USD rate shown at daily intervals.

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“Currency markets appear tired of New Zealand’s ‘good news’ story and instead seek to take downside risks as we approach 2022. These risks could call into question our published forecast calling for a cap on the market. NZD / USD at 0.72 in 2022, ”Croy and his colleagues warned.

So far, concerns have been that the Omicron strain of the coronavirus on multiple occasions would turn out to be a severe edition of the disease as well as resistance to existing vaccines, although and despite this it is still early days, it seems. more and more that is not the case. the case.

While the results of Tuesday’s study from GlaxoSmithKline and Vir Biotechnology suggested that some existing vaccines may prove effective against the new strain, U.S. chief medical adviser Anthony Fauci told CNN on Monday that the disease caused by the strain appeared to be benign.

This is in line with the experience reported by health authorities in South Africa, where the new strain was first confirmed to be a newly mutated edition of the coronavirus, with the experience being one of high transmission but d ‘low severity in terms of the disease caused.

All of this is potentially a boon for risky currencies like the Kiwi dollar and a bearish omen for the rate of the pound against the New Zealand dollar going forward.

“The USD is mostly down against commodity sensitive currencies. Looser monetary policy in China and cautious optimism that Omicron is less stringent than Delta are supporting risky assets and the commodities complex, ”said Elias Haddad, senior currency strategist at the Commonwealth Bank of Australia.

“As reported by the Financial Times, the first hospital data from South Africa suggests that Omicron may lead to less severe illness and has so far not overwhelmed intensive care units,” Haddad wrote in a briefing. Tuesday to ABC customers.

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