The New Zealand dollar has risen to a two-month high against the pound after a report showed Britain had no inflation last month, stoking speculation the Bank of England won't raise interest rates any time soon.
The kiwi hit 51.54 British pence and was trading at 51.50 pence at 8am in Wellington, from 51.10 pence at 5pm yesterday. The local currency advanced to 76.46 US cents from 76.28 cents yesterday.
The pound weakened after data showed British annual inflation hit zero for the first time on record in February, from a 0.3 per cent pace in January, raising speculation it could dip below zero next month. The longer inflation stays below the Bank of England's 2 per cent target, the less likely it is that the bank will raise interest rates any time soon.
"The news suggests that price pressures in UK remain non existent for the time being, leaving BoE on hold for the foreseeable future," Boris Schlossberg, managing director of FX strategy at BK Asset Management in New York, said in a note. The pound "tumbled...in the aftermath of the release as traders pared any expectation of rate hikes to 2016."
In New Zealand today, traders will be eyeing the release of Fonterra's first-half earnings for an update on the dairy exporter's forecast payout to farmers. Separately, trade data for February is also scheduled for release.
