Sterling traded strongly at the end of last week against the kiwi but has slipped back sharply this morning

Sterling managed to close last week at a near two-week high of 2.2056 against kiwi, as the UK currency continued to build on support from a BoE official.

• The ailing pound managed to build on Thursday’s gains, rallying a further 1.2% against the kiwi on Friday, in the wake of a Bank of England policy maker signaling satisfaction with the impact of the central bank's quantitative-easing strategy.
  
• Investors took the opportunity to take strong profits that had been built up earlier last week, taking the sterling / kiwi price back over 2.20.
  
• However, analysts warned that the fundamentals for the pound are still negative, with interest rate differentials favoring high-yielding currencies.
  
• This week's minutes of the Bank of England meeting may also reinforce the fragile nature of the economic recovery, and the likelihood of rates remaining at this low level for some time.
  
• Indeed in trading this morning, the pound has relinquished much of the ground it had recovered, already two cents down on the day as confidence remains high in the New Zealand economy.

Profit taking ahead of the weekend allowed the pound to make further ground against the aussie on Friday

Sterling maintained its rally as investors continued to lock in profits ahead of the weekend, with the price closing the day at 1.7839.

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• Having climbed to multi-year highs against the pound earlier last week, positive comments from members of the BoE concerning the quantitative easing programme triggered an opportunity amongst investors to take profit, driving the price higher.
  
• Comments on Friday were made that stated the asset purchase scheme is having its desired effect on the UK economy, dulling concerns about the possibility of a further expansion.
  
• There was also a slight pull back in demand for the higher-yielding aussie following a weak earnings report from the Bank of America, which gave investors further cause to cash profits.
  
• This morning, traders have resumed aussie buying, with analysts noting that despite some disappointing US corporate earnings, the market remains positive and high-yielders are still on a rising trend.

The single currency slipped back on Friday following weak Bank of America earnings

The US currency snapped a four-day losing streak against the euro, rising from a 14-month low, as investors cautioned their risk activity following further corporate earnings reports.

• The dollar strengthened as Bank of America earnings fell short of expectations, sparking profit taking in the euro, as well as higher-yielding currencies.
  
• The Bank reported losses of $1 billion in the third quarter, which sent equity markets down having rallied on the more positive earnings of other major US banks and corporations earlier in the week.
  
• This report aided the dollar, strengthening haven appeal and bringing the US currency up from multi-month lows against the euro.
  
• In addition, the greenback found support as data showed that US consumer sentiment eased in October, disappointing market expectations.
  
• One analyst stated that if the pound can bounce, then the markets must be wary that the dollar can also. The bounce in the UK currency increases the risk of a broad bounce in the dollar, even if it may only be a short- term reprieve.

The pound made further ground against the US dollar on Friday, buoyed by positive market sentiment

Sterling extended sharp gains against the dollar, as traders cut short pound positions after many reckoned earlier bets against the currency were overdone.

• Sterling found support following further upbeat comments from a BoE member concerning the quantitative easing programme.
  
• Sterling reached up to a three-week high against the dollar, peaking just below 1.64 before closing the week at $1.6353.
  
• Initially sterling trimmed its position after sterling/dollar stop-loss orders were triggered at $1.6300, but some analysts noted that the pound would continue to be supported as investors had taken up fresh long positions in sterling and were willing to hold onto them.
  
• Sterling also found support from recent M&A talk, with Qatar’s sovereign wealth fund planning a renewed offer for the supermarket chain J Sainsbury.
  
• Sentiment towards the US currency remained weak as optimism about the global economic outlook, buoyed by a string of strong US corporate results, turned people away from the greenback in favour of perceived riskier currencies.

Sterling continued to rally at the end of last week, but has relinquished gains in trading this morning

Sterling’s rally against the euro persisted on Friday, albeit with slightly less momentum, with the price closing the week at 1.0971, up 0.8% on the day.

• Sterling’s volatile run continued with a modest climb at the end of last week, as investors squeezed what more they could out of a rally that is expected to fade.
  
• Comments from BoE member Paul Fisher breathed some life into the pound, which has come under heavy pressure in recent weeks, when he stated that the quantitative easing programme is having its desired effect.
  
• His remarks built on those of Charles Bean earlier in the week and were seen as a departure from the Bank’s hitherto-drab assessments of the UK recovery and relaxed opinion of sterling’s decline.
  
• Investors reacted positively to the words, feeling that they may have been too quick to price in a further extension of QE into the market.
  
• In trading this morning however, sterling has slipped back, currently hovering just above 1.09, as investors resume selling the UK currency after another BoE member this time spoke of the need to continue the asset purchase programme.