The yen held near multi-year highs against the dollar and euro early on Friday, having surged after the Bank of Japan refrained from adding fresh stimulus, while sterling recovered ground as the killing of a pro-European Union lawmaker was expected to boost sentiment for the “Remain” camp in Britain's EU referendum.

Because of its safe-haven status, the yen has benefited from uncertainty over the outcome of next Thursday's referendum in Britain on whether to remain in the EU or leave, with both the UK and EU economies seen suffering if Britain quits.

The dollar last stood at 104.22 yen, unable to sustain a rebound towards the 105 mark, and was gyrating near Thursday's 22-month low of 103.555 the previous day.

The euro hovered just above 117.32 yen, after skidding to a three-year trough of 115.51.

Campaigning in Britain was suspended after the parliamentarian, a vocal advocate for staying in the EU, was shot dead in the street.

“Market participants appear to have interpreted the killing as a blow to support for the leave camp,” analysts at Commonwealth Bank wrote in a note to clients.

Sterling bounced back above $1.4200, turning around from a slide to a two-month low of $1.4013.

“$1.4 is an important level in a historical perspective. It is very rare for the pound to stay below that level. It may not be easily broken,” said a trader at US bank in Tokyo.

Preparing for a market storm, many of the world's biggest banks plan to draft senior traders to work through the night following the referendum, and policymakers in several countries are on guard against volatility.

“The pound remains at the mercy of Brexit polls and Brexit odds by bookmakers,” said Rodrigo Catril, currency strategist at National Australia Bank.

In a far more subdued performance, the euro firmed against the greenback, climbing to $1.1256 from a two-week low of $1.1131. That knocked the dollar index back down to 94.41, from a two-week high of 95.318.

Also left in the shadows, the Australian dollar held above 73 US cents and was barely changed on the week.

With the British referendum and Federal Reserve Chair Janet Yellen's congressional testimony both due next week, investors are likely to batten down hatches before the weekend, traders said.

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