New Zealand Dollar improves against the Pound owing to rising inflation

GBPNZD Breaks 2 Year High

The New Zealand Dollar has strengthened against the Pound and a number of different currencies during today’s trading session after the latest inflation news from New Zealand.

The Reserve Bank of New Zealand released the latest inflation estimate which rose by 1.7% which is the fastest pace in seven years.

This is above the mid-target set by the RBNZ and this has led to the Kiwi Dollar strengthening against the Pound today.

The reason why is that if inflation starts to rise the typical way to combat rising inflation is to increase interest rates and although I do not expect interest rates to change anytime soon this has provided some support in favour of hiking rates.

Meanwhile turning the focus back towards what is happening in the UK, the Pound is being dominated by what is happening with the latest Brexit updates.

Some rumours are circulating that the UK may even plan a second referendum and this has caused the Pound to struggle over the last few days.

Today MPs will be asked to vote on the issue of the customs union if there is no trade agreement by 21st January 2019 then voters will be encouraged by pro-European Tories to stay in the customs union.

At the moment the UK is due to be leaving the European Union by end the of March next year and the recent resignations by a number of key ministers are highlighting the uncertainty as to what is happening at the moment politically in the UK and this is being reflected in the value of the Pound vs the New Zealand Dollar.

Tomorrow morning the UK releases inflation data in the form of the Consumer Price Index so watch this space as if this comes out higher than the 2.2% expectation this could provide evidence in support of raising interest rates in the UK at next month’s meeting on 2nd August.

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