WELLINGTON: The New Zealand Dollar fell against the Pound and other currencies after the Reserve Bank of New Zealand (RBNZ) cut its inflation forecasts at its monthly policy meeting.
The RBNZ left its basic cash rate unchanged at 1.75%, as widely expected, but the statement released alongside the decision gave no hint that interest rate rises were in the pipeline. The currency fell after the Bank revised its inflation profile lower at the 1 – 2 year horizon, with recent NZD strength being a major factor driving that revision. Governor Wheeler noted that “policy may need to adjust accordingly.” “Our economists continue to expect a 25bp cut this year, but the curve remains heavily skewed toward a hike,” says Adam Cole at RBC Capital Markets.
As a result of the RBNZ event we now see the GBP/NZD exchange rate trading towards the top of its recent range at 1.7387. Our technical analyst Joaquin Monfort points out that despite the recent jump there is still no clear bias either way from the charts and we await further confirmation for more clarity on which way the pair will break.
