NZ dollar extends decline vs. British pound as pundits pick UK to stay with Europe

Tuesday 21st June 2016

The New Zealand dollar extended its decline against the British pound as a pickup in poll support for Britain to stay in the European Union prompted bookies to increase the odds of a successful 'remain' vote.

The kiwi fell to 48.36 British pence at 8am in Wellington from 48.77 pence yesterday. The local currency was little changed at 71.04 US cents from 71.17 cents yesterday.

UK bookmaker Oddschecker has raised the odds of 'remain' winning the June 23 referendum to 80 percent from a low of 61 percent last week after recent polling since the killing of British MP Jo Cox halted momentum for those in favour of leaving the European bloc. The shortening odds of a remain vote, dubbed 'Bremain', pushed the Sterling near a month-high and saw equity markets gain on both sides of the Atlantic.

"A classic risk-on rally has ensued from the weekend polling showing a decisive shift in upport for the UK remaining in the EU," Bank of New Zealand currency strategist Jason Wong said in a note. "Commodity currencies have outperformed in this risk-on environment. NZD blasted through the 0.71 mark yesterday afternoon and has tracked largely sideways since then."

The local currency slipped to 95.32 Australian cents from 95.52 cents yesterday ahead of minutes to the Reserve Bank of Australia's last policy meeting. The RBA kept its cash rate at 1.75 percent this month with governor Glenn Stevens saying policy was about right to ensure sustainable growth after a reduction in May.

The kiwi slipped to 4.6722 Chinese yuan from 4.6794 yuan yesterday and dropped to 73.39 yen from 74.46 yen. It increased to 62.81 euro cents from 6.51 cents yesterday. The trade-weighted index was little changed from 75.44 at 75.56 yesterday.

BusinessDesk.co.nz

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