NZ dollar hits week high vs. British pound amid 'Brexit' fears

Wednesday 1st June 2016

The New Zealand dollar rose to a week high against the British pound, which slumped as new polling data raised concern about a potential British exit from the European Union.

The kiwi touched 47.70 British pence, and was trading at 46.66 pence at 8am in Wellington, from 45.83 pence at 5pm yesterday. The local currency advanced to 67.60 US cents from 67.27 cents yesterday.

The British pound is sensitive to signals on whether voters are likely to choose to stay or exit the European Union in an upcoming referendum on the so-called 'Brexit' on June 23, with many economists saying the country would benefit from remaining within the regional group. The latest telephone poll by ICM showed 45 percent supported leaving the EU, compared with 42 percent who favoured remaining, whilst 13 percent were undecided.

"GBP was the largest mover overnight, falling as polls showed gains for the ‘Leave’ campaign," ANZ Bank New Zealand senior economist Sharon Zollner and senior foreign exchange strategist Sam Tuck said in a note. "Clearly it is too soon to write-off risks of Brexit."

ANZ expects the kiwi to trade between 45.80 British pence and 47.20 pence today.

In New Zealand today, first-quarter terms of trade data and Quotable Value house statistics for May are due for release.

Elsewhere, China publishes manufacturing activity data for May, while Australia releases first-quarter gross domestic product statistics. Tonight, the focus will be on the fortnightly GlobalDairyTrade auction to see if prices for New Zealand's largest export commodity continue to edge up.

The New Zealand dollar gained to 93.51 Australian cents from 92.79 cents yesterday, increased to 60.74 euro cents from 60.41 cents, advanced to 4.4479 yuan from 4.4278 yuan and edged up to 74.85 yen from 74.77 yen. The trade-weighted index rose to 73.02 from 72.57 yesterday.

BusinessDesk.co.nz

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