NAIROBI (Reuters) - The Kenyan shilling edged higher on Thursday as money markets welcomed a surprise rate cut late on Wednesday and as the currency continued to ride on hopes a new constitution will be approved next week. The central bank's decision to cut its benchmark rate by 75 basis points to 6 percent was seen as boosting Kenya's economic outlook and stabilising the money market. At 0750 GMT, the shilling was quoted at 80.40/60, up from Wednesday's close of 80.55/65. Tea exporters were seen selling dollars, dealers said. "(The market) is still being driven by positive sentiment on the expectation a new constitution will be passed," said Peter Mutuku at Bank of Africa Kenya. The constitution, which would replace an existing constitution in place since the country's independence from British colonial rule in 1963, would include limits on presidential powers and increased civil liberties and analysts say the measures would boost market confidence. Other traders said the euro's strength was also boosting the shilling as the euro's recovery has been seen as a sign of improving risk appetite. But they agreed it was the expectation of a new legal framework for east Africa's largest economy that was driving the market. "Once the referendum is out of the way then we can return back to the economic fundamentals," said Moses Kiboi, head of trading at Citi. Kenyans vote for a new constitution in a referendum on August 4. Opinion polls suggest the proposal, which has long been promised by the government, will pass, although there is still some caution over whether there will also be violence. The shilling dipped slightly after an early rise although traders put this down to interbank movements and the currency returned to highs hit on Tuesday and Wednesday. Asked why the shilling had eased off, Mutuku said: "It's just interbank speculation. Yesterday the tea sector sold quite a bit in the evening, so I suspect the guys were sitting long," he said.