Inflation impacts GBP/NZD (daniel Johnson)

Inflation Concerns for both Britain and New Zealand

The pound has suffered against the majority of major currrencies of late.  Although we have seen a small rally against the New Zealand Dollar over the last 24hrs. The most recent catalyst for the pound’s lack in value is the UK interest rate decision. Interest rates are closely linked to inflation. Inflation is currently a serious concern for the UK nearly breaking 3% at one point.  We have since seen a drop to 2.6%, many believe this to be negative for the UK economy. I disagree, inflation is only beneficial if average wage growth is moving at a similar rate, it currently is running some way below inflation at 1.8%. If consumers are not earning enough to afford the over inflated prices we could have a recession on our hands.

Their have been rumours The Bank of England (BOE) could raise rates should inflation move above 3%.The fall to 2.6% was seen as negative to investors and the pound fell as a result. The previous rate vote from the monetary policy committee (MPC) came in at 5-3, with three members on favour of a hike. Since then Kristin Ford has left the MPC and has been replaced by Silvana Tenreyo who voted to hold rates. The vote now at 6-2 did little to help Sterling against the New Zealand Dollar.

New Zealand also has inflation worries, recent data shows a fall from 2.2% to 1.7%. There has also been a fall in unemployment. The chances of a rate hike by the RBNZ in current economic conditions. I do fell however feel Britain’s problems outweigh that of New Zealand’s.

If you have a large currency transfer to perform in the coming days, weeks or months then I will be happy to speak to you directly as I will be willing to help you both with trying to time a transaction and getting you the best possible rate when you do come to trade. A small improvement in a rate of exchange can make a significant difference so for the sake of taking a few minutes to email me you may find you save yourself hundreds if not thousands of Pounds. You can contact me (Daniel Johnson) on [email protected] and I will endeavor to get back to you as quickly as possible. Thank you for reading.