The Bank of England raised their cash rate to 1.0% overnight from 0.75% the highest since 2009 and the fourth time running. The central bank signalled they would move cautiously in the coming months warning of a possible recession based on an inflation shock. Expectations are that inflation could peak at 10%. Questions are being asked if the BoE should be more aggressive with hikes and “frontload” larger moves? Interestingly the vote was 6-3 in favour to increase by 0.25% with 3 members voting for a 50 point move. The GBP moved off 0.5250 (1.9040) at the release to 0.5190 (1.9270) in early morning trade. Earlier NZ jobs data came in benign at 3.2% vs 3.2% predicted holding its record low since records began in 1986. We think the GBP should be supported in the short term and continue its bull run from 0.5360 (1.8660)
Exchange Rates:
The current interbank midrate is: NZDGBP 0.5195 GBPNZD 1.9249
The interbank range this week has been: NZDGBP 0.5115- 0.5253 GBPNZD 1.9034- 1.9550