Australia, NZ dollar leap to multi-week highs as pound drops

[SYDNEY] 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 US$0.7534, from US$0.7549 in early trade.

It was still up 1.2 per cent this week, not far from a six-week peak of US$0.7568 set on Wednesday following better-than-expected economic growth at home.

Resistance was at US$0.7589 and support at US$0.7478.

Sterling was the clear session loser, down around 1.3 per cent 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 per cent.

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 US$0.7215, near Thursday's three-month peak of US$0.7223 and set for a weekly gain of one per cent.

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 one tick at 98.250. The 10-year contract edged down just under one tick to 97.5625.

REUTERS