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NZ dollar falls to 12-day low vs. Pound as support for Brexit falls

Monday 20th June 2016

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The New Zealand dollar fell to a 12-day low against the British pound as polls showed falling support for the UK leaving the European Union in this week's referendum. 

The kiwi declined to 48.86 British pence at 8am in Wellington from 49.10 pence on Friday in New York. The local currency edged up to 70.65 US cents from 70.50 cents last week. 

Support for the UK to exit the EU, known as 'Brexit', has declined since the murder of British MP Jo Cox, with polls by the Mail on Sunday and Survation both showing the 'Remain' camp in the lead. Prior to the pro-Europe Labour MP's murder, a poll had shown the 'Leave' camp was ahead, with the nation set to vote on the matter on Thursday in the UK. Sterling rallied after the polls, with investors wary of an EU exit's impact on the British economy and financial system. 

"It is hard to think the market’s calmer tone to end last week is going to be an ongoing theme this week, particularly as Brexit campaigning and the release of opinion polls has resumed," ANZ Bank New Zealand economist Philip Borkin said in a note. "The NZD held in a relatively tight range to end the week, with domestic data continuing to show the economy performing well. But domestic events will take a back seat this week as markets focus offshore. Volatility has the potential to be high."

Traders will be watching the BNZ-BusinessNZ performance of services index, out at 10.30am local time today, for another gauge on the local economy, with recent data showing growth outperformed expectations. 

The local currency was little changed at 73.94 yen at 8am in Wellington from 73.39 yen on Friday in New York and slipped to 95.01 Australian cents from 95.26 cents. It edged lower to 62.37 euro cents from 62.60 cents last week and increased to 4.6522 Chinese yuan from 4.6424 yuan. The trade-weighted index was little changed at 75.26 from 75.23 last week.

BusinessDesk.co.nz

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