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Kiwi climbs against pound on Brexit fears

NZ NewswireNZ Newswire 13/06/2016 Tina Morrison

The New Zealand dollar has popped above 50 British pence on concern the UK may vote to leave the European Union.

The kiwi hit 50.08p, its highest level since April last year, and was trading at 49.48p at 8am on Tuesday in Wellington, from 49.57p on Monday.

It was little changed at US70.44 cents from US70.34c.

The British pound has collapsed as recent polls show the Brexit "leave" vote is picking up momentum leading into the June 23 referendum.

That's prompting concern not only about the impact on the UK economy, but a possible fracture of the wider European Union. Investors are also reluctant to take positions ahead of the Federal Reserve interest rate decision on Thursday (NZT), boosting the appeal of safe haven assets such as gold, the Japanese yen and the Swiss franc.

"The market is bracing itself for several key events," said Martin Rudings, senior dealer, foreign exchange at OMF.

"We have an increase in volatility through the market and a lack of liquidity and essentially people are taking risk off the table. Money is pouring into safe haven assets.

"It's a very difficult week to navigate and I think a lot of people are sitting on their hands. It's very confusing and not for the faint-hearted."

In New Zealand on Tuesday, data is published on May food prices.

In the morning, the kiwi was little changed at 95.31 Australian cents from A95.33c following the Queen's Birthday public holiday in Australia.

It fell to 62.34 euro cents from 62.53c, gained to 4.6366 yuan from 4.6318 yuan, and was little changed at 74.49 yen from 74.50 yen.

The trade-weighted index edged up to 75.26 from 75.19.

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