The GBP/NZD currency pair settled below recent high of 2.3123, its strongest level since April 30th, after data showed UK GDP growth had softened.
UK’s Gross Domestic Product dropped 0.1% month-on-month in April, exactly in line with market projections, after a 0.3% expansion in March.
The April Index of Services rose 0.8% on a three-month-on-three-month basis, unchanged from the 0.8% increase seen in March.
Money market pricing reflected expectations for at least a 25 basis point interest rate hike by the Bank of England in September, with a notable chance of a further increase before year-end.
At the same time, the New Zealand Dollar has drawn support from the Reserve Bank of New Zealand’s abrupt shift to a more hawkish stance.
Reserve Bank of New Zealand Governor Anna Breman had noted that the official cash rate was likely to rise sooner and by a larger amount than previously signaled. She pointed to inflation pressures linked to the Middle East conflict, softer growth and rising input costs in New Zealand.
The central bank’s projections indicate a 25 basis point rate increase at the upcoming July 8th meeting. The RBNZ also suggested that the official cash rate could rise to around 2.85% by year-end, implying as many as three rate hikes over the period.
The minor Forex pair gained 0.46% for the week.
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