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Kiwi Hits 1-Week High Versus Pound, as NZ Underlying Inflation Surges

Market CommentaryKiwi Hits 1-Week High Versus Pound, as NZ Underlying Inflation Surges
Kiwi Hits 1-Week High Versus Pound, as NZ Underlying Inflation Surges
Image credit: Mihow.

Welcome to Pure FX's latest update of the New Zealand dollar to pound interbank exchange rate.

This tells you when it's an excellent time to exchange New Zealand dollars to pounds, for your money transfer!

The kiwi jumps versus sterling! The New Zealand dollar to pound interbank exchange rate has hit 0.5163 today, its highest in 1 week, or since July 10th.

The New Zealand dollar has strengthened against the pound, because the Reserve Bank of New Zealand's (RBNZ) gauge of underlying inflation has unexpectedly surged.

The NZ dollar has climbed, in particular because underlying inflation between April and June reached +1.7%, said the RBNZ on Monday, the highest since 2011.

New Zealand's underlying inflation rocketed in Q2, thanks to rising electricity prices, plus a sharp rise in alcohol prices, said the central bank, thus boosting the kiwi dollar.

This has boosted the NZ dollar, first because when New Zealand's inflation climbs, this tells us that New Zealand's economy is strong enough to generate higher price pressures.

This has also lifted the New Zealand dollar, because this significantly cuts the odds that the RBNZ will cut interest rates in the coming months, below their current 1.75%!

Pound Weakens, as Tories Fight Over Brexit Bill

What's more, the New Zealand dollar has also strengthened against the pound, because the UK's governing Conservative Party is seriously in-fighting with itself over Brexit.

Sterling has weakened, first because pro-Brexit Tory group the European Research Group (ERG) yesterday forced prime minister Theresa May to harden her plans for the UK's EU exit.

This has dragged down the pound, because the ERG's victory has enraged pro-Remain Tory MPs, such as Nicky Morgan, who are now demanding changes to Mrs. May's Brexit trade bill.

Also, given that the prime minister is being attacked by both sides of her party, it's feared that Mrs. May could suffer a leadership challenge this week, thus further weighing on sterling.

All this has hurt the pound, because the Tory Party's in-fighting cuts the odds that the UK will agree a favourable Brexit deal with the EU, in turn slowing the UK's exports and GDP growth.

With this in mind, the New Zealand dollar to pound interbank exchange rate has hit this 1-week high!

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Please bear in mind, this article is Pure FX’s opinion only and does not constitute advice. Moreover, the exchange rates referred to in this article are the interbank rates, which are the rates at which banks and financial institutions buy and sell currency to each other. Therefore these exchange rates cannot be accessed by individuals or SMEs, and are not the same rates that Pure FX can offer. To get a free exchange rate quote, call us on +44 (0) 1494 671800, or email peter.lavelle@purefx.co.uk.

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