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Kiwi climbs on pound, greenback

NZ Newswire logoNZ Newswire 3/08/2017 Jonathan Underhill
NZ dollar falls as greenback strengthens © Bloomberg/Daniel Acker NZ dollar falls as greenback strengthens

The New Zealand dollar has risen against the British pound after the Bank of England kept its benchmark interest rate unchanged and lowered its forecasts for economic growth, inflation and wages.

The kiwi dollar gained to 56.60 British pence as at 8am on Friday in Wellington from 55.96p late Thursday. The kiwi rose to US74.39 cents from US73.99c.

BoE governor Mark Carney said the "speed limit" of the economy had slowed and economic growth this year was expected to be 1.7 per cent, down from a previous forecast of 1.9 per cent, while 2018 growth was cut to 1.6 per cent from 1.7 per cent.

The pound tumbled against the euro and the greenback. The kiwi gained against the US dollar after US services sector data printed weaker than expected.

"The BoE took centre stage with the Bank downgrading its GDP and wage growth forecasts," said ANZ chief economist Cameron Bagrie.

"The USD remains unloved and that makes it difficult to get too bearish NZD/USD."

Traders expect the Reserve Bank will keep the official cash rate at 1.75 per cent when it reviews policy next week and some see the track of interest rates being flattened even further.

"The tide is going out on market expectations for OCR hikes, but that need not necessarily count against the NZD specifically given similar themes evident in the UK, Australia and the US," Mr Bagrie said.

On Friday morning, the kiwi rose to 93.54 Australian cents from A93.23c on Thursday and gained to 4.9946 yuan from 4.9780 yuan. The kiwi rose to 62.64 euro cents from 62.46c and traded at 81.80 yen from 81.90 yen.

The trade-weighted index rose to 78.17 from 77.86.

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