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NZ dollar rises to 3-month high vs pound

NZ Newswire logoNZ Newswire 13/06/2017

NZ dollar © Getty NZ dollar The New Zealand dollar rose to a three-month high against the pound on Tuesday on concern an unstable minority government in Britain will be in a weaker position to negotiate an exit from the European Union.

And that it may not even be able to hold onto power.

The kiwi rose to 57.12 British pence, the highest since mid-March, from 56.40 pence late Monday.

The local dollar edged up to US72.24c, and earlier touched 72.30c, the highest since late February.

The pound extended its decline in Asia to a two-month low against the greenback as Prime Minister Theresa May tries to stitch up her numbers with the help of Northern Ireland's Democratic Unionist Party.

Overnight, Moody's Investors Service said Britain's inconclusive election result could delay Brexit, reduce the focus on trimming the budget deficit and erode its Aa1 credit rating.

"The pound is probably looking a little bit over-valued from here," said Mitchell McIntyre, a dealer at HiFX.

"The kiwi dollar is just outperforming. It's a high yielder, it has a strong economy and commodity prices have stabilised."

Confirmation of the New Zealand economy's performance will come on Thursday with the gross domestic product report, which is expected to show the economy grew 0.7 per cent in the first quarter, up from a 0.4 per cent rate in the fourth quarter of last year, for an annual pace of 2.7 per cent.

The main event this week is likely to be the Federal Reserve's Open Market Committee meeting, where a quarter-point increase in the fed funds rate is widely expected.

The kiwi traded at A95.59c from 95.58c Monday. It rose to 4.9089 yuan from 4.8898 yuan and gained to 79.46 yen from 79.31 yen. It rose to 64.52 euro cents from 64.16 cents.

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