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Asia: Pound extends rally as Brexit fears ease

Monday, June 20, 2016 - 13:39
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[TOKYO] The pound extended its rally in Asian trade on Monday as investors swung their bets to Britain voting to remain in the European Union this week.

Long-running fears of a pro-Brexit vote on June 23 had been hammering the British currency and became heightened in recent weeks as the "Leave" campaign pulled ahead in the polls.

On Monday, the pound gained as the first poll taken after the murder of pro-European Union lawmaker Jo Cox suggested the "Remain" camp was gaining momentum.

In Tokyo, the currency rose to US$1.4570 from US$1.4348 in New York late Friday, when it rallied in part due to the three-day suspension of campaigning after the Cox's killing on Thursday.

The euro, meanwhile, firmed to US$1.1353 and 118.82 yen from US$1.1280 and 117.52 yen, while the dollar rose to 104.66 yen from 104.19 yen.

"Weekend polls suggested the tragic death of Jo Cox may be shifting some support back to 'Remain' - that has helped risk sentiment a bit," Robert Rennie, the global head of currency and commodity strategy at Westpac Banking in Sydney told Bloomberg News.

"The polls are also driving the move away from safe-haven currencies," Rennie said.

The probability of a vote to leave the EU declined to about 30 per cent on Sunday from almost 40 per cent on Wednesday, according to bookmaker odds processed by the Oddschecker website, Bloomberg reported.

But a key polling average calculated by research site What UK Thinks puts the "Remain" and "Leave" voters neck and neck.

The Japanese currency, often seen as a safe haven, had strengthened as concerns grew the "Leave" camp was headed to victory but has pulled back as Brexit momentum appeared to slow.

Japan's finance ministry announced early Monday that the country logged a trade deficit of 40.72 billion yen (S$523 million) in May, the first shortfall since January.

In other trading, the dollar slipped against the Malaysian and Indonesian currencies, falling 0.97 per cent to 3.9023 against the ringgit and 0.57 per cent to 13,263.00 against the rupiah, respectively.

AFP