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NZ dollar falls to 2-year low vs pound

Published: Tue 11 Sep 2018 11:40 AM
NZ dollar falls to 2-year low vs pound as Barnier talks up Brexit
By Paul McBeth
Sept. 11 (BusinessDesk) - The New Zealand dollar dropped to its lowest level against the British pound since the June 2016 Brexit referendum after EU chief negotiator Michel Barnier said a deal could be reached as early as November.
The kiwi fell as low as 50 pence and was trading at 50.04 pence at 8am in Wellington from 50.47 pence yesterday. The local currency was little changed at 65.20 US cents from 65.17 cents yesterday as investors wait for US President Donald Trump to decide on whether to impose more tariffs on Chinese imports.
The pound gained 0.8 percent after Barnier said it was "realistic" and "possible" to reach an agreement on Brexit in six-to-eight weeks. That built on recent headlines that the EU and UK are close to bridging their differences on the split. Separately, the Financial Times reported EU leaders will give new instructions to Barnier at the Sept. 20 mini-summit to seal the deal, giving the European parliaments time to ratify the agreement. The pound was largely unmoved by stronger than expected UK economic growth.
"The market figures that Brexit negotiations will have a far more meaningful impact on future [Bank of England] policy and the GBP than current UK data," Bank of New Zealand senior markets strategist Jason Wong said in a note. "NZD weakness is evident not just against the USD, but also on many of the crosses. NZD/GBP is hovering just above 50 pence, levels last seen prior to the Brexit vote in mid-2016."
Local data today include August consumer spending on electronic cards, which economists will monitor to see whether the government's package targeted at low-income households encouraged retail activity. BNZ economists trimmed their forecast for second-quarter gross domestic product growth to 0.6 percent from 0.8 percent after data yesterday showed a contraction in manufacturing sales due to outages at major energy producers.
The kiwi traded at 91.64 Australian cents from 91.66 cents yesterday. National Australia Bank, one of the nation's 'four pillars' lenders, said yesterday it won't raise variable mortgage rates, putting it out of step with its three major rivals but in line with the Reserve Bank of Australia, which has kept the target cash rate on hold.
The local currency increased to 72.50 yen from 72.31 yen yesterday and fell to 4.4698 Chinese yuan from 4.4702 yuan. It slipped to 56.23 euro cents from 52.44 cents yesterday. The trade-weighted index edged down to 71.07 from 71.10.
(BusinessDesk)
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