NZ dollar falls vs pound on UK govt plans

The New Zealand dollar fell against the British pound throughout the early hours of the morning as speculation grew that Conservative leader David Cameron was close to becoming prime minister.

By 8am today, shortly after Cameron's position was confirmed, the kiwi was down to 47.97p from 48.48p at 5pm yesterday.

The New Zealand dollar also eased against the greenback and yen, while edging up against the euro as concerns about the euro zone's ability to contain a debt crisis blunted initial enthusiasm after a rescue package was announced.

At 8am the NZ dollar was buying US71.70c from US71.88c at 5pm, and was at 66.52 yen from 66.65 at the local close, along with 0.5654 euro at the local open from 0.5643.

The euro fell against other major currencies as investors wondered whether weaker euro zone economies can deliver the drastic spending cuts and tax increases needed to get their fiscal houses in order.

"Markets aren't buying the story. It's clear that the markets remain very concerned about the fiscal outlook for Europe," said Mike Moran, senior currency strategist at Standard Chartered Bank in New York.

In its morning briefing notes, ANZ bank said a downside bias for the NZ dollar had been duly delivered as markets lost patience with the euro.

The kiwi was at a similar level against the Australian dollar at 8am as it had been the local close, buying about A80c.

ANZ said the Australian federal budget last night had delivered forecasts of a return to surplus three years earlier than previously forecast.

That would be heavily dependent on the passage of a resource super profits tax, which was not assured so markets may question the timing, ANZ said.

The trade weighted index slipped to 68.21 at 8am from 68.28 at 5pm.

- NZPA