NZ dollar hits 13-month high vs. British pound as 'Brexit' fears grow

Monday 13th June 2016

The New Zealand dollar touched its highest level against the British pound in 13 months and is approaching the 50 British pence level, with recent signs British voters are leaning towards an exit from the European Union, referred to as Brexit, in an upcoming referendum.

The kiwi hit 49.65 British pence, its highest level since May last year, and was trading at 49.52 pence at 8am in Wellington, from 49.03 pence at 5pm on Friday. The local currency slipped to 70.50 US cents from 70.56 cents at the New York close and 70.85 on Friday.

The British pound sank after the publication of an ORB poll for the UK's Independent newspaper ahead of the June 23 referendum showed the ‘leave’ camp opened up a 10-point lead over ‘remain’, with 55 percent planning to vote to leave and 45 percent intending to vote to stay, showing the margin had widened from a 51/49 split in the equivalent poll back in April, and a contrast from the same poll a year ago which put 'remain’ in front by 60/40. Most economists expect Brexit would hurt the UK economy.

"As the GBP remains under pressure, the NZD/GBP has the 0.5000 level firmly in its sights - the cross last traded above this level in April last year," Bank of New Zealand senior market strategist Kymberly Martin said in a note. "The fate of this cross remains in the hands of the UK referendum which is now only 10 days away."

In New Zealand today, Real Estate Institute of New Zealand house sales data for May is expected to be released. Australian markets are closed for the Queens Birthday public holiday and this afternoon the focus will turn to a slew of Chinese data releases for May, including industrial production, retail sales and fixed asset investment.

The New Zealand dollar fell to 75.32 yen from 75.84 yen as investors favoured safe haven assets after oil prices fell and amid concerns about the risk of 'Brexit'.

The kiwi dropped to 4.6241 yuan from 4.6471 yuan, edged lower to 62.64 euro cents from 62.72 cents, and was little changed at 95.53 Australian cents from 95.56 cents.The trade-weighted index slipped to 75.37 from 75.52.

BusinessDesk.co.nz

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