Strenghtening risk appetite for riskier assets, supports demand for the kiwi

Having advanced strongly following the BoE’s statement yesterday, the pound fell sharply against the kiwi as investors chose to cash in on profits.

• Demand for the pound strengthened yesterday as the UK economy was given a level of stability following the BoE’s decision to keep both interest rates and its asset purchasing scheme unchanged.
  
• In the wake of this news, the pound made strong gains against the kiwi, briefly reaching 2.3906.
  
• However, at this point, investors, speculating that the climb against a strong New Zealand dollar could not be sustained, chose to cash in on short profits made, which sent the pound tumbling back down to a close of 2.3644, a fall of 0.6% for the day.
  
• This morning the pound, having suffered a broad sell off, briefly recovered back over 2.3700, but has since slid further as demand for higher-yielging currencies strengthens amid a recovering global economy.