Pound-New Zealand Dollar could remain volatile around the BoE decision, while weaker New Zealand growth may leave the Kiwi under pressure.
The Pound New Zealand Dollar (GBP/NZD) exchange rate briefly touched a two-month high during Wednesday’s Asian trading session, before relinquishing its gains amid the UK’s latest consumer price index.
At the time of writing, GBP/NZD traded at NZ$2.3412, down from its earlier high of NZ$2.3488.
Pound to New Zealand Dollar (GBP/NZD): 2.341475 (-0.06%)
Euro to New Zealand Dollar (EUR/NZD): 2.005094 (-0.06%)
New Zealand Dollar to Dollar (NZD/USD): 0.571653 (-0.59%)
DAILY RECAP:
The Pound (GBP) managed to hit a two-month high against the New Zealand Dollar (NZD) during Wednesday’s Asian trading session, although Sterling quickly suffered some profit-taking, with GBP surrendering most of its overnight gains.
When European trade began, the Pound remained somewhat subdued, despite the release of the UK’s latest consumer price index.
The CPI showed that headline inflation rose from 2.9% to 3.1% in August, as expected, while core inflation held steady at 2.6%.
Sterling was muted following the data, as the anticipated rise in inflation did little to alter Bank of England (BoE) interest rate hike bets ahead of Thursday’s policy announcement.
Meanwhile, the New Zealand Dollar stumbled during Wednesday’s Asian trading session, despite an improving market mood and some upbeat New Zealand data.
The country’s latest consumer confidence index rose to 89.5 in Q3, up from 80.4 and beating forecasts for 82.3.
However, after hitting a two-month low against GBP, NZD seemed to attract some dip-buying and managed to rebound. An uptick in risk appetite may have helped prop up the ‘Kiwi’.
Near-Term GBP/NZD Forecast: BoE Decision in the Spotlight
Looking ahead, New Zealand’s second-quarter GDP figures are due out on Wednesday night. Markets expect to see a sharp slowdown in growth, which could weigh on the ‘Kiwi’.
Attention then turns to the Bank of England’s interest rate decision. No policy change is expected, leaving the focus on the bank’s forward guidance.
The bank’s Monetary Policy Committee (MPC) remains deeply divided, which could leave Sterling exposed to volatility. A cautious majority could undermine GBP, while Sterling could strengthen if there are any signs that some policymakers are leaning more hawkish.
Our currency coverage draws on live market data, official economic releases and published bank research.
