Kiwi gains to month-high vs pound as weaker Brexit mulled

The New Zealand dollar rose to a month-high versus a broadly weaker pound on speculation the progress of Brexit negotiations could slow and fell versus the greenback on optimism about US tax cuts.

The kiwi dollar traded at 52.53 British pence as at 8am in Wellington, having traded as high as 52.72 pence in New York on Friday from 52.14 pence in Asia at the end of last week. It traded at 69.98 US cents from 69.89 cents in New York, when it fell back below 70 cents.

At a meeting in Brussels on Friday, European Union member states agreed that Britain had provided enough guarantees about its exit from the EU to begin talks on its future relationship with the economic bloc although after the summit, Germany's Chancellor Angela Merkel said: "The most difficult phase is ahead of us," as the two sides seek to agree on the post-Brexit relationship. Meanwhile, the greenback gained on optimism US tax reforms will be enacted, including slashing the corporate rate to 21 percent from 35 percent.

"The GBP was one of the worst performing currencies on Friday, despite EU leaders officially agreeing to move to the next phase of Brexit talks, focused on the terms of a transition arrangement for after March 2019 and ultimately on a trade agreement," said Nick Smyth, interest rate strategist at Bank of New Zealand.

In New Zealand today, traders will be watching for the services PSI for November and the ANZ Consumer Confidence Index for December but the big economic event will be the release of third-quarter gross domestic product data on Thursday, which is expected to show growth slowed to 0.6 percent in the quarter for an annual pace of 2.4 percent as a bounce in construction was offset by declines in dairy production and housing-related spending.

The trade-weighted index was little changed at 73.85.

The kiwi dollar was little changed at 59.53 euro cents, traded at 78.82 yen from 78.78 yen on Friday in New York and was at 91.35 Australian cents from 91.39 cents. It traded at 4.6248 yuan from 4.6235 yuan.

(BusinessDesk)