NZ dollar gains against pound on Brexit turmoil

By Rebecca Howard

Sept. 3 (BusinessDesk) - The New Zealand dollar was higher against the British pound on the prospect of a general election in the UK if opposition lawmakers vote to try to block Brexit.

The kiwi was trading at 52.27 British pence at 7:50 am in Wellington from 51.85 pence late yesterday. The trade-weighed index was at 70.69 from 70.58.

The pound tumbled when British Prime Minister Boris Johnson gave a veiled hint that he would call an election if lawmarkers vote to delay Brexit.

"I want everybody to know, there are no circumstances in which I will ask Brussels to delay. We are leaving on 31 Oct, no ifs or buts," Johnson said in a statement at Downing Street.

Anti-no deal MPs are expected to bring a motion in Parliament early this week aimed at forcing the government to delay Brexit until Jan. 31 if a deal with the EU cannot be reached by mid-October. Johnson called for a united front.

"Let's let our negotiators get on with their work without that sword of Damocles over their necks and without an election," he said. "I don't want an election. You don't want an election. Let's get on with the peoples' agenda."

The kiwi remained fairly steady against the greenback as US markets were closed there for Labour Day. It was trading at 63.09 US cents from 63.07 cents yesterday.

Today, markets will be focused on the Reserve Bank of Australia rate decision. ANZ expects the RBA to remain on the sideline for another month, even as it faces the prospect of yet another downgrade to its 2019 growth forecast.

"The RBA will be aware that growth looks likely to severely undershoot its forecasts," ANZ economist Michael Callaghan said. However, employment was solid in July, consumers are more positive about their finances and there are signs the housing market is turning, he added.

The kiwi was trading at 93.88 Australian cents from 93.70. It was at 4.5238 Chinese yuan from 4.5140, at 66.98 yen from 66.94 and at 57.50 euro cents from 57.37.

(BusinessDesk)

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