NZ dollar holds near 15-month high vs pound as Brexit woes threaten May's leadership

Wednesday 12th December 2018

The New Zealand dollar held near a 15-month high against the British pound as UK Prime Minister Theresa May's inability to garner support for a Brexit deal threatens her leadership.

The kiwi traded at 54.83 British pence as at 8am in Wellington from 54.70 pence yesterday. It traded at 68.70 US cents from 68.81 cents.

The pound has remained under pressure after strong opposition prompted May to delay a parliamentary vote on her Brexit deal and forced her to resume lobbying Europe for greater concessions on the Northern Ireland border. The back-down has stoked speculation her leadership may be challenged, adding to uncertainty in the region.

Meanwhile, France's domestic outlook has deteriorated with the Banque de France halving its fourth-quarter economic growth forecast to 0.2 percent as violent protests over a planned fuel tax hike weigh on retailers.

"The whole Brexit event has clearly turned into a debacle, and with European leaders unlikely to make any concessions it is not clear exactly what removing May from the leadership will actually achieve so late in the game," ANZ Bank New Zealand economists Miles Workman and Philip Borkin said in a note."‘No deal’ Brexit preparations will need to intensify."

While a smooth Brexit seems increasingly unlikely, the US and China made some headway soothing their rocky relationship after US Treasury Secretary Steven Mnuchin talked with Chinese vice premier Liu He to set out the next stage in trade talks. Tensions were heightened last when Huawei Technologies executive Meng Wanzhou was arrested in Canada at the behest of the US.

No local data is scheduled for today, although Reserve Bank governor Adrian Orr is appearing before MPs in the monetary authority's annual parliamentary review.

The kiwi traded at 95.46 Australian cents from 95.45 cents yesterday and declined to 4.7374 Chinese yuan from 4.7473 yuan. It traded at 77.83 yen from 77.76 yen yesterday and rose to 60.70 euro cents from 60.52 cents. The trade-weighted index was at 75.21 from 75.24.

(BusinessDesk)

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