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FOREX-Sterling falls to 8-week low on Brexit anxiety, yen gains broadly

Published 13/06/2016, 10:57 am
© Reuters.  FOREX-Sterling falls to 8-week low on Brexit anxiety, yen gains broadly
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* Cable hits 8-week low on rising worries on Brexit

* Yen surges to 3-year high vs euro, pound

* Swiss franc at 3-month high vs euro

By Hideyuki Sano

TOKYO, June 13 (Reuters) - The British pound fell to an eight-week low against the dollar on Monday amid trepidation ahead of a referendum that could push Britain out of the European Union, while the yen gained broadly as the mood turned sombre after Sunday's mass shooting in the United States.

The British pound GBP=D4 , which lost 1.4 percent on Friday, its second biggest fall so far this year, shed another 0.2 percent in early Asian trade to $1.4208. It fell to as low as $1.4159, its weakest since April 18.

"The referendum is getting nearer and opinion polls are showing a very tight race," said Shin Kadota, chief FX strategist at Barclays (LON:BARC).

Implied volatilities on sterling soared as market players felt the need for protection against the currency's fall. Three-month pound volatility shot up to 17.2 percent GBP3MO= , its highest level since early 2009.

Opinion polls published during the weekend showed voters were still divided over whether to end Britain's European Union membership. pound also hit a one-month low against the euro, which rose to as high as 79.355 pence EURGBP=D4 . It last stood at 79.135.

The safe-haven yen meanwhile surged to its highest level in three years against both sterling and the euro as investors sought shelter in the Japanese currency with sentiment taking a further battering following a mass shooting in the United States on Sunday. sterling hit a near three-year low of 150.68 yen GBPJPY=R , while the euro also slipped to a three-year nadir of 119.52 yen EURJPY=R .

The dollar lost 0.4 percent to 106.60 yen JPY= , edging near one-month low of 106.26 touched last Thursday.

While many market players think the Bank of Japan will keep its policy on hold at its meeting on June 15-16, that perception could change if the dollar falls below its 18-month low of 105.55 set on May 3.

The euro EUR= slipped to $1.12475, its lowest since June 3, giving up more than a half its gains made after disappointing U.S. employment data on that day.

The safe-haven Swiss franc held firm, hitting its highest level against the euro in three months.

It stood at 1.0840 franc per euro EURCHF=R , having lost 2.2 percent last week, its biggest weekly fall since January 2015, when the Swiss National Bank suddenly scrapped its floor for the currency pair. (Editing by Shri Navaratnam)

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