May 22, 2024

The GBPNZD pair has data on RBNZ and inflation ahead of Wednesday. 

GBPNZD-–-Daily-ChartGBPNZD – Daily Chart 

GBPNZD found support at the 2.07 level, confirming an uptrend support line. There is resistance at the 2.095 level for further strength. 

A press conference with the Reserve Bank of New Zealand at 11 am HKT could provide an initial spark for the pair. That will be followed by inflation from the UK at 2:00 pm HKT.

The UK’s core inflation is expected to slow to 3.6% from 4.2%, and the annual inflation rate is expected to drop significantly from 3.2% to 2.1%. The New Zealand dollar was slightly lower ahead of the Reserve Bank’s monetary policy update. However, hawkish comments could boost the Kiwi dollar’s price. 

The New Zealand treasury has been bearish about economic prospects, saying there was “No turning point in sight” due to lower retail spending and slow business activity across various sectors. Weaker credit data and a slowing housing market have also hurt the Kiwi economy. 

According to market researcher Kantar, UK grocery inflation fell for the 15th consecutive month in May, reaching its lowest level since October 2021. Annual grocery price inflation was 2.4% in the four weeks to May 12, down from 3.2% the previous month. 

Official UK data published last month showed consumer price inflation falling to 3.2% in March, driven by a slowdown in food inflation to 4%. 

The International Monetary Fund said there is still the potential for three interest rate cuts in the UK this year. Wednesday’s data release could put that to the test. A higher inflation number could see the British pound rally further. 

The Washington-based organisation said there was a risk of “delays” to the Bank of England cutting rates, suggesting that the level needs to be up to 0.75% lower. 

While inflation is expected to fall very close to the BoE’s 2% target on Wednesday, it is expected to show volatility, rising over the year before “durably” hitting 2% in 2025. BoE Governor Andrew Bailey also said he expects “quite a drop” in April inflation.

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