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'Bremain' odds lower kiwi against pound

NZ NewswireNZ Newswire 20/06/2016 Paul McBeth

The New Zealand dollar has 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 on Tuesday in Wellington from 48.77p on Monday. The local currency was little changed at US71.04 cents from US71.17c.

UK bookmaker Oddschecker has raised the odds of "remain" winning the June 23 referendum to 80 per cent from a low of 61 per cent 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 support for the UK remaining in the EU," BNZ 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."

On Tuesday morning, the local currency slipped to 95.32 Australian cents from A95.52c on Monday ahead of minutes to the Reserve Bank of Australia's last policy meeting. The RBA kept its cash rate at 1.75 per cent this month with governor Glenn Stevens saying policy was about right to ensure sustainable growth after a reduction in May.

The kiwi also slipped to 4.6722 Chinese yuan from 4.6794 yuan, dropped to 73.39 yen from 74.46 yen and increased to 62.81 euro cents from 6.51 cents.

The trade-weighted index was little changed at 75.44 from 75.56.

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