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Rise in the uk interest rate?

Rise in the uk interest rate?

Old Aug 3rd 2006, 2:36 pm
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Default Rise in the uk interest rate?

Hi all,
I was just wondering what influence the rise to 4.75% of the UK interest rate, would have upon the exchange rate for the kiwi dollar.
If any fluctuation is pending how quickly will it adjust its self.
Any educated ideas would be greatly appreciated. For some reason global economics is not my best point. Thanks Lee
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Old Aug 3rd 2006, 3:06 pm
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Default Re: Rise in the uk interest rate?

Should go up a bit, but the markets have been pricing in a rise for months so it probably won't make a huge difference. It may jump up when the Bank of England minutes are released around the 20th, if that gives a good reason to expect more rises in the near future.
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Old Aug 3rd 2006, 10:07 pm
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Default Re: Rise in the uk interest rate?

Originally Posted by MarkG
Should go up a bit, but the markets have been pricing in a rise for months so it probably won't make a huge difference. It may jump up when the Bank of England minutes are released around the 20th, if that gives a good reason to expect more rises in the near future.

Sorry Mark, Does this mean more $ to the £ or vice versa.
Also when you say the markets have been pricing in a rise for months, could you explain this .
I'm just trying to figure out the speculation for the exchange rate for the next 9 months or so to convert my £ to $.
Thanks again Lee
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Old Aug 4th 2006, 2:28 am
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Default Re: Rise in the uk interest rate?

Currency markets have been expecting an interest rate rise in the UK for months, and that's why the pound went up from 1.70-ish to the US dollar to around 1.85 over the last few months. It's up a bit further today, but most of the benefit of the rise was already priced in.

But if the Bank of England minutes say 'oh damn, inflation is going up, we'd better raise quick', then the pound will rise further even before future rate increases.
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Old Aug 4th 2006, 4:19 pm
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Default Re: Rise in the uk interest rate?

Thanks Mark,
OK if Ive got this right. Basically the doom and gloom of interest rate rises in the UK, will in theory benefit any prospective Brit sending their monies over to NZ in the near future.
Ahh another lesson in global economics received and not understood
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