Demand for the kiwi remained strong yesterday, but it has lost ground in the wake of comments from Ben Bernanke

The pound edged down against the kiwi as rising risk appetite in the market offset the BoE’s decision to hold their monetary policy unchanged.

  • Investors continued to buy into the higher-yielding New Zealand dollar, encouraged by rallying global equity markets and a broadly weaker dollar.
  • In the UK, the BoE kept interest rates at 0.5% and decided against extending the quantitative easing programme as some had feared.
  • However, the decision only gave the pound a muted boost against the kiwi, as investors had already priced the news into the market.
  • In trading this morning, the kiwi has trimmed its gains as investors lock in some profits and as comments from the Fed Chairman suggested that the US may need to tighten monetary policy, spurring a slight return to the US dollar.
  • However analysts have noted that overall market sentiment towards the kiwi is still pretty bullish, and that any upward movement for the pound is likely to be as a result of profit taking, rather than decreasing demand for kiwi assets.