Dollar falls below 50p as polls favour Scotland staying in UK

The New Zealand dollar fell below the key 50 British pence level as weekend polls favouring Scotland remaining in the UK ahead of this week's vote strengthened the pound.

The kiwi touched a six-week low of 49.94 British pence this morning, and was trading at 50.13 pence at 8am in Wellington, from 50.30 pence at 5pm on Friday. The local currency was at 81.58 US cents from 81.51 cents at the New York close and 81.69 cents on Friday ahead of the Federal Reserve meeting this week.

Scottish voters head to the polls this Thursday to vote in a referendum on whether the country should break its alliance with the UK after more than three centuries. Leaders from the UK's three main political parties urged voters to maintain the union amid campaigning during the last weekend ahead of the vote. The British pound, which has been volatile in the lead up to the referendum, strengthened as three of four polls at the weekend showed a tilt towards Scotland remaining in the union.

"The NZD/GBP now sits just above the psychologically important 50 (British pence) level," Kymberly Martin, senior market strategist at Bank of New Zealand, said in a note. "The fate of the cross this week will reside with the outcome of the Scottish independence vote. A 'no' vote could see a knee-jerk rebound in the British pound."

In New Zealand today, traders will be eyeing the publication of the BusinessNZ/BNZ Performance of Services Index for a gauge on how the service sector is tracking at 10:30am.

The kiwi advanced to 90.54 Australian cents from 90.10 cents on Friday.

Weak Chinese data released over the weekend may weigh further on the Aussie today, said the BNZ's Martin. Chinese industrial output data showed factory production in Asia's largest economy rose 6.9 percent in August from the year earlier, slower than the 9 percent pace in July and the 8.8 percent forecast in a Bloomberg survey.

The New Zealand dollar slipped to 87.41 yen from 87.61 yen on Friday. Japanese banks are on holiday today in observance of Respect for the Aged Day.

The local currency weakened to 62.87 euro cents from 63.21 cents. The trade-weighted index was at 78.31 from 78.35 on Friday.

(BusinessDesk)