aussie dollar gains ground to sterling

The Australian dollar strengthened against the pound over weekend, gaining further ground as persistent worries about the British banking sector continued to weigh on sterling. GDP data released in the UK on Friday also undermined sterling, as it showed the British economy contracted by a larger than expected 1.5%. It is a public holiday in Australia today, while in the UK BBA mortgage approvals data will be released.

Kiwi trades mixed ahead of Wednesday's rate announcement

The New Zealand dollar strengthened against the pound over the weekend following the release of British GDP data on Friday. However, the pound is recovering lost ground this morning, as speculation grows that the Reserve Bank of New Zealand will cut interest rates aggressively when they meet on Wednesday. Many analysts are suggesting the central bank will cut rates by a full 1%.

Sterling under pressure against the US dollar

Sterling fell to a 23 year low against the dollar on Friday following the release of Gross Domestic Product data which confirmed that the UK is officially in recession. GDP fell by a larger than expected 1.5%, the largest quarter on quarter fall since 1980. By 14.57 GMT on Friday sterling was down 1.5 percent at $1.3644, after previously falling to $1.3500, the lowest level since September 1985. Separate data showed UK retail sales rose 1.6 percent in December from the previous month, but difficulties led to the data being compiled on a non-seasonally adjusted basis.

There are several announcements taking place in the US today including Existing Home Sales and Leading Indicators at 15.00 GMT. In the UK, BBA Mortgage Approvals data will be released at 09.30 GMT.

Sterling weakens further on Friday following GDP figures

Sterling rounded off a miserable week against the euro on Friday, and finished still lower against the single currency. Friday was the day when the UK’s recession was officially confirmed, as GDP figures revealed that the UK economy contracted at its fastest pace since 1980. It is the first time since 1991 that the UK has been in recession, although it has been on the cards for some time, with 2009 already looking tough for the economy. Better than expected retail sales figures were largely ignored by investors, as the negative sentiment surrounding the pound continues. News out of the eurozone was also poor, as soft data was released in both the service and manufacturing sectors.

There are no major economic announcements due in the eurozone today, whilst within the UK, mortgage approvals data is released.