The New Zealand Dollar has made some significant gains against the Pound due to large drop in coronavirus cases and a very successful containment problem. This gives the New Zealand economy a good chance to get back on its feet. The New Zealand Dollar is usually considered one of the riskier currencies, but in current circumstances it is faring well.
Sterling is not the destination of choice in times of global economic uncertainty due to the difference in the amount we import compared to the amount we export. Even if it were not for Corona the pound would remain vulnerable. There is a complete lack of clarity surrounding trade following Brexit. The PM has also vowed that there will be no extension to trade negotiations past 2020 which makes a no deal scenario still a possibility. A no deal is considered a huge risk by investors and due to this reason amongst others the general consensus is to stay clear of the pound. If an extension is announced we can expect some Sterling strength.
The coronavirus situation does not seem to be being handled as well in the UK as other countries around the globe with a huge death toll which is a terrible situation for the UK but it will also weigh heavily on the economy as the longer the lockdown the weaker the economy will become. There have been some bold monetary policy changes by the bank of England (BOE) who have slashed interest rates and pledged to pump money onto the economy to create liquidity.
2020 could be a rough year for the Pound, even more so than some had first estimated. It could be we see further gains for the New Zealand Dollar as New Zealand continue to win the battle against Corona and the UK situation remains far from good.
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