NZ dollar gains vs pound after BoE keeps rates unchanged, cuts growth, inflation forecasts
By Jonathan Underhill
Aug. 4 (BusinessDesk) - The New Zealand dollar rose against the British pound after the Bank of England kept its benchmark interest rate unchanged and lowered its forecasts for economic growth, inflation and wages citing the likely impact of exiting the European Union.
The kiwi dollar gained to 56.60 British pence as at 8am in Wellington from 55.96 pence late yesterday. The kiwi rose to 74.39 US cents from 73.99 cents yesterday.
BoE governor Mark Carney said the "speed limit" of the economy had slowed and economic growth this year was expected to be 1.7 percent, down from a previous forecast of 1.9 percent, while 2018 growth was cut to 1.6 percent from 1.7 percent. The pound tumbled against the euro and the greenback. The kiwi gained against the US dollar after US services sector data printed weaker than expected.
"The BoE took centre stage with the Bank downgrading its GDP and wage growth forecasts," said Cameron Bagrie, chief economist at ANZ Bank New Zealand, in a note. "The USD remains unloved and that makes it difficult to get too bearish NZD/USD."
The trade-weighted index rose to 78.17 from 77.86 yesterday.
Traders expect the Reserve Bank will keep the official cash rate at 1.75 percent when it reviews policy next week and some see the track of interest rates being flattened even further.
"The tide is going out on market expectations for OCR hikes, but that need not necessarily count against the NZD specifically given similar themes evident in the UK, Australia and the US," Bagrie said.
The kiwi rose to 93.54 Australian cents from 93.23 cents yesterday and gained to 4.9946 yuan from 4.9780 yuan. The kiwi rose to 62.64 euro cents from 62.46 cents and traded at 81.80 yen from 81.90 yen.