By Tina Morrison
The New Zealand dollar rose to an eight-month high against the British pound as divisions in the UK's ruling Conservative Party raised uncertainty about whether the country will remain in the European Union.
The kiwi touched 46.64 British pence, and was trading at 46.57 pence at 8am in Wellington, from 46.19 pence at 5pm on Friday. The local currency edged up to 66.34 US cents from 66.29 cents at the New York close and 66.16 cents on Friday.
The pound slumped after London Mayor Boris Johnson said he was opposed to UK Prime Minister David Cameron's bid to stay in the EU.
Heading in to the weekend, the pound had strengthened after Mr Cameron announced a June 23 referendum on the country's EU status after negotiating some concessions.
However Mr Johnson, a high profile, charismatic politician, later said he would vote to leave the Union. The chasm highlighted division in the UK's Conservative Party and uncertainty around the outcome of the vote.
"While Cameron will be campaigning for the UK to stay in the EU, a quarter of his Cabinet will be voting the opposite and polls are evenly divided," BNZ's Jason Wong said.
"Implied volatility on GBP has recently moved up to its highest in five years, signalling increased currency volatility ahead as the referendum nears."
The New Zealand dollar slipped to 92.84 Australian cents from 93.12 cents on Friday ahead of a speech by Reserve Bank of Australian assistant governor.
The kiwi edged up to 59.59 euro cents from 59.48 cents on Friday, and gained to 4.3255 yuan from 4.3135 yuan. It slipped to 74.55 yen from 74.67 yen. The trade-weighted index advanced to 72.21 from 72.07 on Friday.