The Australian and New Zealand dollars jumped to multi-week highs against a battered pound after early results of UK elections suggested a much closer race than anticipated, leaving both currencies with likely hefty weekly gains. The Aussie, however, took a backseat against its US counterpart at $0.7534, from $0.7549 in early trade. It was still up 1.2 percent this week, not far from a six-week peak of $0.7568 set on Wednesday following better-than-expected economic growth at home. Resistance was at $0.7589 and support at $0.7478.
Sterling was the clear session loser, down around 1.3 percent on both the Aussie and New Zealand dollars. It was last at A$1.6934, having dipped to A$1.6861, the lowest since mid-April and was on track for a weekly drop of 1.9 percent. Ray Attrill, a strategist at National Australia Bank, said he saw room for further slippage in the pound should the Conservative Party of British Prime Minister Theresa May fail to win a majority.
“We should see a full retracement of the April rally with the pound back around the A$1.6600 area,” he said. Likewise, the pound skidded to NZ$1.7723, not far from a trough of NZ$1.7627, a level not seen since late March. It has shed 12 pence since mid-May to last trade at NZ$1.7688.
The Aussie and New Zealand dollars were poised for large weekly gains versus the euro and the Canadian dollar. The New Zealand dollar steadied at $0.7215, near Thursday’s three-month peak of $0.7223 and set for a weekly gain of 1 percent.
New Zealand government bonds gained, sending yields 0.5 basis points lower at the long end of the curve. Australian government bond futures were soft, with the three-year bond contract off 1 tick at 98.250. The 10-year contract edged down just under one tick to 97.5625.