The British Pound (GBP) looks to close the week out strong, edging ahead of the New Zealand Dollar (NZD) for the third week straight after moving off 0.5230 (1.9130) to 0.5230 (1.9360) a new five week low. Risk markets are down with equities back at weekly lows and commodity prices retracing. The RBNZ raised its cash rate from 1.0% to 1.5% last week in the fight against rising inflation- turns out the right move as inflation y/y ballooned out to 6.9% yesterday marginally lower than the 7.1% predicted but still a 30 year high. For the quarter this equates to 1.8% less than the 2% estimate but well down on where we think “true” inflation lies. Initially the release pushed the kiwi higher but in the hours following price had dropped. Bank of England’s Bailey commented overnight “we are in a period of unprecedentedly large shocks” with short term inflation expectations increasing. Bailey will speak more on inflation tomorrow, heading into the weekly close we think price is skewed to the downside.
The current interbank midrate is: NZDGBP 0.5160 GBPNZD 1.9379
The interbank range this week has been: NZDGBP 0.5162- 0.5227 GBPNZD 1.9128- 1.9371