By Swati Pandey
SYDNEY, Nov 16 (Reuters) - The Australian and New Zealand dollars were set for their best weekly performance in nearly a year against sterling as political turmoil in Britain fanned fears the country could crash out of the European Union without a divorce agreement.
Against the Aussie, the pound GBPAUD=R held near a 2-1/2 month trough at A$1.7593, after posting its worst daily percentage decline since August 2016 on Thursday.
The currency is down about 2 percent for the week so far, the biggest weekly fall since December 2017.
Against the New Zealand dollar, the pound GBPNZD=R hovered near 10-month lows touched on Thursday when it tumbled 2 percent for its weakest single day performance since Britain's vote to leave the EU in June 2016.
Sterling is on track to post its six straight weekly decline against the antipodean currencies.
The losses came overnight after a series of resignations threatened British Prime Minister Theresa May's government and cast a cloud over her much awaited Brexit deal only hours after the draft agreement was unveiled.
Analysts expect market gyrations to continue.
"It is hard to say where we head from here but we are set for a volatile few weeks," said Daniel Been, head of forex research at ANZ.
The Aussie fared well elsewhere, too.
Against the U.S. dollar, it AUD=D4 managed to hold on to gains made earlier this week. The currency was last at $0.7266 after repeatedly failing at key chart resistance of $0.7300.
The Aussie is up 0.5 percent this week, on track for its third consecutive weekly rise.
Most of those gains came on Thursday after robust employment data showed 32,800 new jobs were created in October, handily beating market forecasts of 20,000. still expect the Reserve Bank of Australia (RBA) to keep interest rates at a record low 1.50 percent in the near term as inflation is still tepid and wage growth is low. 0#YIB:
The kiwi NZD=D4 held near a 4-1/2 month top against the greenback at $0.6822. It broke above key barrier of $0.6820 to climb to a high of $0.6841.
For the week, the kiwi has so far risen 1.3 percent and was set for its third straight weekly gain.
(Editing by Kim Coghill)