Australian dollar strengthens against the pound

The Australian dollar made sharp gains against sterling late on Friday, after renewed optimism over a US stimulus package saw improved appetite for higher yielding currencies. Despite poor US jobs numbers, investors speculated that this could spur US lawmakers into deciding on the stimulus package more quickly. Wall Street rose on the back of this, dragging other major stock markets with it. Markets largely shrugged off further dismal economic data which showed sharp declines in both British manufacturing output and industrial production. This may indicate that markets are now satisfied that they have already priced in most of the bad news for the pound. Investors will today eye more forecasts for British growth; further readjustments downwards are likely.