The New Zealand dollar fell against the British pound after a report showed UK manufacturing activity unexpectedly surged last month, stoking speculation about future interest rate hikes.
The kiwi slipped to 43.63 British pence at 8am in Wellington, from 43.93 pence at 5pm yesterday. The local currency weakened to 67.29 US cents from 67.81 cents yesterday.
The British pound jumped higher after the UK purchasing managers' index for the manufacturing sector rose to 55.5 in October, its highest level in 16 months and ahead of the 51.3 expected and 51.8 reading in September.
The survey showed new export orders picked up, while employment remained in expansion for the 30th successive month. The report adds weight to speculation the Bank of England will tighten monetary policy, although most economists believe it is unlikely to do so at this week's policy review.
"It's looking increasingly likely that the BoE will have to consider a rate hike sooner rather than later," Boris Schlossberg, managing director of FX strategy at BK Asset Management in New York, said in a note.
"Still the central bank is likely to tread lightly and is certainly unlikely to announce anything new at the meeting this Thursday. Several analysts have pointed out that should BoE turn unambiguously hawkish, it could 'light a rocket' underneath the pound and send the currency soaring damaging the prospects for further export growth."
