Australian dollar slightly weaker against sterling

The Australian dollar was slightly weaker against the pound yesterday, after investors were uninspired by the announcement of the US bank rescue package. This caused a downturn in stock markets, triggering an upturn in risk aversion. Economic data was mixed out of the UK as the pace of falls in house prices quickened, while retail figures were better than expected and Britain's trade deficit narrowed. Later today investors will focus on key UK unemployment data and the BoE quarterly inflation report. The bank report on inflation may give further clues as to the size and timing of future rate cuts. Markets are expecting inflation levels to undershoot the target levels, paving the way for further rate cuts.