NZ dollar holds near 3-month high vs pound on May's minority government
By Jonathan Underhill
June 12 (BusinessDesk) – The New Zealand dollar traded near a 3-month high against the British pound after elections left UK Prime Minister Theresa May without an outright majority and held above 72 US cents ahead of this week's Federal Reserve meeting.
The kiwi traded at 56.64 British pence as at 8am in Wellington from 56.54 pence in New York on Friday. The kiwi traded at 72.06 US cents from 72.09 cents.
May will reportedly seek support from a small Northern Irish party to stay in power after her gamble on calling a snap election backfired, leaving her in a weaker position to negotiate an exit from the European Union and stoking talk she may not be able to hold onto her position. Meanwhile, the Federal Open Market Committee meets this week, with a quarter point hike to the fed funds rate almost fully priced in, while in New Zealand, figures may show economic growth accelerated in the first quarter.
"The only price action of note on Friday was the plunge in GBP as soon as exit polls showed a likely inconclusive and therefore shocking election result," said Jason Wong, currency strategist at Bank of New Zealand. "We suspect that the NZD is running into some headwinds following the strong recovery over the past couple of weeks. Q1 GDP data this week is expected to be on the soft side, while the FOMC is expected to hike rates and potentially not deviate much from its recent policy tone and rate projections."
The kiwi traded at 95.65 Australian cents from 95.67 cents on Friday in New York. It traded at 4.8959 yuan from 4.8979 yuan. It slipped to 79.45 yen from 79.54 yen last week and fell to 64.26 euro cents from 64.37 cents. The trade-weighted index was at 77.60 from 77.62.