The kiwi touched 51.72 British pence early on Thursday morning, and was trading at 51.62 pence at 8am in Wellington, from 51.38 pence at 5pm a day earlier. The local currency was little changed at 86.62 US cents from 86.60 cents.
The British pound was the weakest major currency overnight after BoE governor Mark Carney in the bank’s quarterly inflation report said Britain’s recovery was still in its early stages and there is enough slack in the economy to keep interest rates on hold for a while yet.
That deflated the expectations of some investors who had bet the bank would raise rates in less than a year’s time.
“The Bank of England failed to boost expectations for monetary tightening,” said Kathy Lien, managing director of foreign exchange strategy for BK Asset Management in New York. “Most investors were positioned for a more optimistic and hawkish outlook from the central bank.”
In New Zealand the budget is expected to highlight the strong local economy, and reiterate forecasts for a return to surplus next year.
The New Zealand dollar advanced to 92.32 Australian cents from 92.14 cents.
It was little changed at 63.13 euro cents from 63.14 cents ahead of the final reading of April European inflation. The European Central Bank is preparing a package of policy options for its June meeting including cuts in all its interest rates and targeted measures aimed at boosting lending to small and mid-sized firms, Reuters reported.
The local currency dropped to 88.20 yen from 88.45 yen while the trade-weighted index edged up to 80.52 from 80.47.