Kiwi found support from the strength of its neighbour yesterday, and as global equities rallied strongly

The pound lost a further one and a half cents to the kiwi following negative UK data, and as the aussie rate hike put the focus on the next RBNZ rate decision.

  • Fears that Britain’s fragile economic recovery is faltering were sparked after official figures revealed a surprise fall in industrial output in August.
  • The data showed a 1.9% drop in manufacturing output month on month, a full 2.5% below the market prediction, encouraging further pound selling.
  • The kiwi also benefited indirectly from the 25 basis point rate rise in Australia, which supported demand for higher-yielding currencies.
  • The pound is now trading at record 20-year lows against the New Zealand dollar, as investors price a similar move from the New Zealand central bank into the market.
  • The New Zealand dollar is up a further 0.3% this morning, as stronger global equities, higher dairy prices, and a weak US dollar helped to maintain support for risk trades.