NZ dollar little changed near 2-month high vs pound as May speech awaited

Against the Chinese yuan, the kiwi jumped to 4.8734 yuan from 4.8231 yuan. Photo / File

The New Zealand dollar was little changed near a two-month high against the British pound, with trading restrained by the Martin Luther King Jr holiday in the US, ahead of a Brexit speech by UK Prime Minister Theresa May and the latest dairy auction tonight.

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The kiwi dollar traded at 58.91 British pence as at 8am in Wellington from 58.98 pence late yesterday. It traded at 70.99 US cents from 70.89 cents.

May is scheduled to deliver a speech on Tuesday in the UK which the Sunday Times reported will spell out her commitment to leaving the European Union, a move that many economists say will hurt the UK economy.

The pound dropped to a new three-month low against the greenback overnight, the lowest level since October's so-called flash crash amid concerns about a 'hard Brexit' which would see the UK losing access to any trade and economic benefits with the EU.

"GBP weakness was the key event into European trading and although lows were posted early in the European day, GBP rebounds were very contained as market's await Theresa May's speech tomorrow in which she is expected to provide some outline of the government's Brexit strategy," Imre Speizer, senior market strategist at Westpac Banking Corp.

He said there was little market reaction to new International Monetary Fund forecasts which project stronger global growth for 2017.

GBP weakness was the key event into European trading and although lows were posted early in the European day...

Imre Speizer, senior market strategist

Traders will be watching for Real Estate Institute house sales data today and the GlobalDairyTrade auction tonight, which will follow declines in prices at the previous two sales.

The trade-weighted index rose to 78.22 from 78.07. The kiwi traded at 94.91 Australian cents from 94.86 cents late yesterday. It rose to 4.9008 yuan from 4.8882 yuan and traded at 66.94 euro cents from 66.80 cents. The kiwi was little changed at 81.03 yen from 80.92 yen yesterday.