Australian dollar claws back some ground against sterling

The Australian dollar managed to claw back some of the previous day's losses against sterling yesterday, as the pound continues to be weighed down by a bleak economic outlook.

• Markets were given a sobering reminder of the difficult recover the UK economy is facing with Wednesday's BoE inflation report.
  
• The British central bank forecast inflation to go well under the banks target range while the economy is expected to recover at a slower pace than was originally thought.
  
• The aussie dollar, on the other hand, remains well supported as a recovery in equity markets yesterday increased risk appetite and demand for higher yielding currencies.
  
• However, the pound has regained some ground against the aussie dollar this morning, after investors sold the euro and bought the pound following worse-than-expected German GDP figures
  With no economic data due from the UK today direction is likely to be determined by broader market movements.