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Kiwi down on pound after BoE comments

NZ Newswire logoNZ Newswire 28/06/2017 Jonathan Underhill

The Kiwi dollar © Getty Images The Kiwi dollar The New Zealand dollar has fallen to a three-week low against the pound after Bank of England governor signalled it may be necessary to remove some of the bank's monetary stimulus, suggesting interest rates could be raised as British economic growth picks up.

The kiwi dropped to 56.50 British pence as at 8am on Thursday in Wellington, and earlier touched 56.16p, from 56.77p late Wednesday. It traded at US73.09 cents, up from US72.76c.

The BoE's Mark Carney told a European Central Bank conference in Portugal that some removal of monetary stimulus is likely to become necessary with a return to more conventional policy decisions.

The comments come after the BoE's policy committee was split this month on whether to begin raising interest rates from a record-low 0.25 per cent.

The kiwi recovered some ground against the euro after the ECB indicated president Mario Draghi hadn't intended to send any hawkish signals to the market in his comments in Portugal.

"Markets are sensing a coordinated effort by central bank heads to give the message that global monetary policy is close to an inflexion point and economies can handle some removal of monetary accommodation," said BNZ currency strategist Jason Wong.

"The market isn't confident that a (UK) hike will come as soon as the next meeting in August, but OIS pricing moved to a better than even chance of a hike by November."

On Thursday morning, the kiwi rose to 64.19 euro cents from 64.11c late Wednesday, having earlier tumbled against the regional bloc's currency. It slipped to 95.58 Australian cents from A95.72c, rose to 82.06 yen from 81.59 yen and gained to 4.9672 yuan from 4.9487 yuan.

The trade-weighted index rose to 78.38 from 78.21.

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