Australian dollar holds its ground

The Australian dollar held its ground against sterling yesterday, as UK manufacturing figures came in stronger than forecast. Data revealed the rate of decline in British manufacturing eased more than expected last month, which caused speculation that the government’s aggressive monetary easing may be starting to take effect. However, investors remained cautious given the overall economic outlook for the shorter term remained bleak. This was reinforced by comments from BoE policymaker, David Blanchflower, who stressed that the UK had yet to feel the pain of rising unemployment. Much of the bad news is already priced into sterling but the turning point for the UK economically still seems a little way off.