The GBP/NZD currency pair initially hit an intraday high of 2.2209 on Wednesday, then moved back below the 2.2100 mark, after a policy decision by the Reserve Bank of New Zealand and after data showed annual core inflation in the UK had picked up sharply in January.

The Reserve Bank of New Zealand cut its official cash rate by 50 basis points to 3.75% at its February policy meeting, in line with market consensus.

The move brought borrowing costs to their lowest level since October 2022 amid slowing GDP growth and easing inflation.

Yet, the central bank indicated that further rate cuts would be of smaller size and the end of the monetary easing cycle was not too far now.

RBNZ Governor Adrian Orr flagged more 25 bps rate cuts likely in April and May, which would leave borrowing costs in a neutral range. Orr noted there was no need to “rush” to neutral.

Meanwhile, annual inflation rate in the UK has accelerated to 3% in January, data by the Office for National Statistics showed, from 2.5% in December. It has been the highest rate since March 2024.

Market consensus had pointed to a slower increase – to 2.8%.

Services inflation surged to 5% from 4.4% in December, but came below the BoE’s forecast of 5.2%.

And, UK’s annual core CPI inflation, which excludes volatile categories such as food and energy, accelerated to 3.7% in January from 3.2% in the prior month.

The data could prompt the Bank of England to slow its monetary easing cycle.

The GBP/NZD currency pair was last down 0.29% on the day to trade at 2.2027.