GBP/NZD is around 2.3529 on Wednesday morning, above Tuesday’s reported 2.3479 level as British inflation strengthens Sterling ahead of New Zealand’s own price figures.
UK annual CPI reached 3.5% in September, adding to the pressure for a Bank of England increase after Tuesday’s firmer employment report.
New Zealand’s quarterly inflation release is due at 22:45 BST on 21 October, making the Kiwi’s next domestic test imminent.
The RBNZ already forecasts annual inflation of 3.9% for the September quarter, so a high headline reading alone would not necessarily force a faster policy response.
Evidence that price rises are spreading beyond fuel would present a stronger challenge to the central bank’s gradual approach.
Petrol prices rose 6.4% in September, showing the direct pressure on households before the broader quarterly report arrives.
Credit Agricole expects inflation risks to force the RBNZ to accelerate tightening, a view that offers the Kiwi support even while domestic demand remains weak.
Chief Economist Paul Conway has acknowledged that higher oil prices and a weaker currency increase the risk of inflation exceeding the RBNZ’s projections.
Strong agricultural export prices offer another source of support for New Zealand incomes, although the benefits have not yet spread evenly through the economy.
GBP/NZD is near its shorter moving averages and about 1.1% above its 100-day exponential average, retaining some of Sterling’s longer-term strength.
Our December forecast average of 2.2504 is approximately 4.4% below Wednesday’s rate, with all five contributors expecting fewer Kiwi Dollars per Pound.
A softer inflation report could delay that projected reversal by weakening the case for an increase at the RBNZ’s 28 October meeting.
Mid-market reference rate. Customer rates normally include provider margins and fees.
