The Pound New Zealand Dollar (GBP NZD) exchange rate fluctuated today as markets reacted negatively to Britain’s latest inflation figures.
Pound (GBP) Tumbles as Inflation Slows
The Pound fell across the board this morning following the release of the UK’s latest CPI figures.
According to the CPI figures by the Office for National Statistics (ONS) the UK’s inflation rate held at 2.6% in July, coming in lower than the 2.7% forecast by economists.
Sterling sentiment sank as markets fear that the slowing of inflation will allow the Bank of England (BoE) to continue to leave interest rates on hold for the foreseeable future.
Fawad Razaqzada, market analyst at Forex.com, said;
‘The pound has been largely out of favour ever since the Bank of England’s last policy meeting a couple of weeks ago, Given the recent rise in inflation and the general improvement in the UK economy, the markets were surprised by the BoE’s dovishness. But today’s release of the latest inflation data for the month of July underscores the BoE’s cautious approach… the pound’s immediate reaction was a swift drop.’
New Zealand Dollar (NZD) Slumps as Dairy Prices Tumble
However The New Zealand Dollar gains proved to be short lived as the ‘Kiwi’ was forced to cede almost of the day’s gains late in the afternoon following a disappointing result in the latest Global Dairy Auction.
According to the GDT price index, overall dairy prices tumbled a further 0.4% in today’s auction, adding to the 1.6% decline seen in the previous meeting.
With Dairy products accounting for over 20% of all of New Zealand’s exports the prices set that the bi-weekly auction have major economic implications for the country.
This is the forth decline in prices in five auctions as global supply levels appear to continue to outstrip demand despite expectations that consumption will rise 1.7% over the next twelve months.
GBP NZD Forecast: UK Earnings Data to Apply More Pressure to Sterling?
Looking ahead the GBP NZD exchange rate may slide further on Wednesday as the UK releases its latest employment data.
With the jobless rate expected to hold at 4.5% in June markets are likely to focus on the accompanying wage figures, with expectations that wage growth remained flat at the end of the second quarter likely to drag on Sterling as UK households face a further drop in real wage figures.
Current Interbank Exchange Rates
At the time of writing the GBP NZD exchange rate was trending around 1.7756 and the NZD GBP exchange rate was trending around 0.5627.
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