Sterling fell from near two-year highs against the euro on Wednesday and struck a three-week low versus the dollar after minutes from this month’s Bank of England policy meeting were less hawkish than some in the market had anticipated.
The minutes showed that Bank of England officials discussed whether there was a case for an early interest rate rise, but there were concerns about hurting the recovery. The nine members of the Monetary Policy Committee voted unanimously to keep interest rates on hold, disappointing the market at the same time.
In addition, Thursday’s retail figure came in slightly lower than expected, fuelling further momentum to the downside.
The other big mover this week was the Kiwi. After four rate rises this year, the Reserve Bank of New Zealand looks set to hold the official interest rate (OCR) at 3.5 per cent for the rest of the year before moving again.
And the central bank’s warning that the high New Zealand dollar was “unjustified and unsustainable” and could fall significantly, proved true. The kiwi was thumped after the OCR announcement, falling by almost 100 pips against the US dollar, from 8700 to 8600, in a matter of minutes.