RBNZ Inflation Warning Supports NZD, But GBP Faces Further Headwinds
The Pound to New Zealand Dollar (GBP/NZD) exchange rate has been under pressure after the Reserve Bank of New Zealand's (RBNZ) warning about inflation. Governor Anna Breman expressed concern that near-term inflation could come in above forecasts due to rising oil prices.
This news initially caused the NZD to slip, but it rebounded sharply as investors took the prospect of stronger-than-expected inflation into account.
The RBNZ has signaled a gradual pace of tightening, and this development may put more pressure on them to raise rates quickly. However, the recovery was short-lived, and the 'kiwi' was undermined by growing risk aversion in European trading sessions.
In other news, the Pound came under selling pressure due to higher-than-expected public sector borrowing in August, which added to concerns about the government's fiscal headroom ahead of the upcoming Budget.