Sterling lost further ground to the kiwi yesterday in the wake of the BoE inflation report

Sterling fell another 0.5% against the kiwi dollar as confidence in the UK economy was undermined by the BoE and Mervyn King.

• "The depreciation of sterling should lead to a recovery in economic activity," King said after the bank's quarterly report was published. "The outlook for inflation is again highly uncertain."
  
• Given more recent positive economic fundamentals in the UK, the market had anticipated a relatively upbeat report. However the dovish tone saw investors sell off the pound sharply after the report was released, taking it down to near two-week low against the kiwi.
  
• The kiwi has continued to gain in trading this morning, finding support from firmer Asian equities.
  
• Overnight, retail sales data was released in New Zealand, which actually disappointed market expectations. Sales rose by 0.2% in October, falling short of forecasts for a monthly rise of 0.5%
  
• However, the kiwi remains steady on the day,as yesterday's inflation report continues to weigh on the pound.