Today's headlines: UK inflation back to target | Return to growth expected in NZ GDP
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UK inflation back to target
The pound has been surprisingly strong this morning considering the consumer price index (CPI) is back to the Bank of England's target rate of 2.0%, down from 2.3% in the previous month. Core inflation is still running relatively hot though at 3.5%. That may be the reason traders are shunning the obvious move to sell sterling ahead of any Bank of England interest rate cut. As at this morning, the GBP/USD rate is back up to $1.2730 and the GBP/EUR rate is pushing €1.1850. The Bank of England's mandate is to maintain the CPI inflation rate at 2% or at least within a range of 1% to 3%. Thus far, they have shown very little interest in reducing the cost of borrowing but maintaining their base rate at 5.25% is almost certain to cause an undershoot in inflation and that can be just as damaging to the economy. We will get to see what the BOE thinks tomorrow when they make their interest rate announcement.
Return to growth expected in NZ GDP
New Zealand will release economic growth data overnight tonight and the markets are forecasting a 0.2% level of annual growth in the year to March, a healthy rebound from the 0.3% contraction we saw in the last quarter of 2023. The GBP/NZD rate has moved a little higher this morning after the UK inflation data but it's still only around NZD2.0725. If we see growth in the Kiwi economy of any more than 0.2%, there is every chance this exchange rate will be lower by tomorrow morning.?
Today's Major Economic Releases?
06:00 GBP Consumer Price Index
06:00 GBP Core Consumer Price Index (YoY)(May)?
22:45 NZD Gross Domestic Product??
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Interbank Exchange Rates?
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