Pound strengthens over Aussie dollar

The Australian dollar fell from its 10 week high against sterling yesterday after UK inflation rose unexpectedly in February. The rise in British consumer price inflation is believed to be temporary due to sterling’s recent weakness. This was coupled with Bank of England Governor Mervyn King’s comments that the central bank’s quantitative easing programme may be reduced if it is successful. Support for sterling was also seen as investors cheered a US plan to soak up toxic assets which have plagued the credit markets, however gains were limited by weaker equities.