Tuesday 21 March 2017 08:35 AM
NZ dollar gains vs pound after UK PM May sets date for start of Brexit process
By Jonathan Underhill
March 21 (BusinessDesk) - The New Zealand dollar rose against the British pound after UK Prime Minister Theresa May announced the date she will trigger Article 50 that puts in motion her nation's departure from the European Union.
The kiwi rose to 57.04 British pence as at 8am in Wellington from 56.82 pence late yesterday. The local currency rose to 70.50 US cents from 70.37 cents.
The pound weakened immediately after May said she will trigger Article 50 on March 29, setting off what's expected to be a two-year process for Britain to extricate itself from the regional economic bloc. The kiwi dollar is stronger ahead of tonight's GlobalDairyTrade auction, even though dairy futures are indicating a 4 percent decline in prices of milk powder, following a marked decline at the last auction two weeks ago. No change is expected from the Reserve Bank when it reviews interest rates on Thursday, keeping the official cash rate at 1.75 percent.
"With very little in the way of scheduled economic data releases to drive direction the big news overnight came out of the UK when the British PM Theresa May announced that Article 50 of the Lisbon Treaty will be invoked on the 29th March," said currency traders at HiFX, in a note. "The triggering of Article 50 means that the UK will leave the European Union by the end of March 2019 with or without a trade deal in place. The GBP traded to session lows immediately after the announcement."
Traders will be watching for February tourism and migration data and credit card billings today, while across the Tasman, minutes of the Reserve Bank of Australia's last meeting are due to be released this afternoon.
The trade-weighted index was at 76.46 from 76.32 late yesterday. The kiwi rose to 65.61 euro cents from 65.40 euro cents and was little changed at 91.12 Australian cents from 91.14 cents. It rose to 4.8694 yuan from 4.8582 yuan and gained to 79.36 yen from 79.18 yen.