GBP / NZD 1Q Forecast: GBP / NZD Long As Competing Pound And Kiwi Move In 2021
GBP / NZD was not a currency cross that I paid much attention to until 2020, but that has changed over the year as I have been asked about it multiple times in my webinars. weekly on market sentiment. To the surprise of many analysts, 2020 was a better year than widely predicted for the British pound, which rose against the US dollar after falling sharply in March and was broadly stable against the euro in the second half of the year. . This was despite the tortuous negotiations between the EU and the UK over their relationship once the Brexit transition period is over.
However, the New Zealand dollar was even stronger from April with the GBP / NZD falling from around 2.10 to around 1.90 as hopes of a global recovery – driven by the development of Covid vaccines -19 – increased and increased the demand for “risk on”. currencies like the New Zealand dollar and the Australian dollar, both of which are closely linked to the performance of the Chinese economy.
GBP / NZD price chart, daily period (January 1 – December 3, 2020)
Graphic prepared by Martin essex, created with IG
In 2021, however, I wouldn’t be surprised if the trend reverses and the GBP starts to outperform the NZD. On the NZD side, the good news of a possible global economic recovery has already been largely integrated into the markets. On the GBP side, pessimism persists over how the UK will survive outside the EU. There is therefore room for the British economy to perform better than expected and therefore for the pound to strengthen further. Long-term forecasts are still tough, but I see no reason why GBP / NZD shouldn’t rise to 2.10 and potentially strengthen even more.
Recommended by Martin Essex, MSTA
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