Sterling performs modestly against Aussie dollar

The Australian dollar weakened against sterling over the weekend, after comments from US senate banking committee chairman Christopher Dodd that it may be necessary to nationalise some US banks for a short period. This fuelled growing uncertainty over some of the world’s largest banks, and coupled with an already grim economic outlook kept investor risk aversion high. Meanwhile data on Friday revealed an unexpected rise in British retail sales for January compared with the previous month, as shoppers took advantage of post Christmas sales. Although this provided some support for the pound it was largely overshadowed by downbeat European data, which is likely to continue to be a drag on the UK economy.

In this morning's trading the Aussie dollar has in fact strengthened back over a weakening pound.

GBPAUD: 1 week chart. Please click on chart to enlarge.