The kiwi edged higher against the pound but has weakened this morning following important Chinese data

Having given up ground to the UK currency in early trading, the kiwi rallied steadily through the afternoon, to close marginally up at 2.1833.

• The pound found support yesterday after the BoE’s policy minutes revealed no direct discussion over further loosening the current monetary policy.
  
• In the wake of the news, sterling posted an intra-day high of 2.2074 as investors grew more confident in the outlook for the UK economy.
  
• However, the New Zealand dollar capped its losses as Alan Bollard, governor of the Reserve Bank of New Zealand, in a speech appeared surprisingly reserved over the recent appreciation of the kiwi dollar.
  
• Mr Bollard said that kiwi strength was “not necessarily an obstacle to raising the cash rate,” encouraging investment in the higher-yield currency.
  
• In trading this morning, the New Zealand dollar has weakened, enabling the pound to advance back towards 2.20, as Chinese data failed to do more than meet market forecasts, giving traders a reason to cash profits.

Pound continued to climb against the aussie yesterday as confidence in the UK economy improved

A broadly stronger pound hit a two-week high against the aussie, briefly rising over 1.8000, as confidence in the UK economy gained momentum.

• Sterling jumped following the minutes from the Bank of England’s latest policy meeting, which dampened expectations of an extension to quantitative easing.
  
• The minutes appeared to move the balance of market expectations to the possibility of a pause of the government’s asset purchase scheme in November, reversing recent speculation.
  
• In addition, the aussie dollar found its strength undermined as commodity prices, most notably oil, turned lower, discouraging investors from the higher-yielding currency.
  
• In trading this morning the pound has continued to advance, reaching back over 1.80, as investors cut long positions in the “riskier” currency after Chinese data dashed expectations of some who were betting on a positive surprise.
  
• The most significant figure, the Chinese 3rd quarter GDP, revealed a growth rate of 8.9%, bang in line with expectations, however there had been hopes of over 9.0%.

Euro managed to push through $1.50, but has slipped this morning following mildy disappointing Chinese data

The single currency resumed its upward march against the greenback yesterday, finally broaching the 1.50 mark, to close up half a cent at 1.5015.

• In early trading, the euro retreated from near 14-month highs as some investors bet European policy makers would say they are still concerned that the euro’s strength will harm the economic recovery.
  
• Analysts also said that the single currency’s sharp fall against the pound weighed on the euro/dollar price, which has recently remained anchored just below the $1.50 level.
  
• However, the dollar relinquished its gains in the afternoon as rising U.S. equities encouraged enough risk appetite to push the single currency to the highest level since last August.
  
• In trading this morning, the single currency has once again slipped back as solid data from China gave traders a reason to take profits.
  
• Analysts have noted, though, that the dollar is likely to continue to broadly weaken as sentiment towards the US currency remains downbeat on the prospect of sustained low US interest rates.

Sterling made substantial ground on the dollar yesterday as the BoE showed no sign of loosening montary policy further

Dollar selling in the market was stepped up with investors moving into the pound as the MPC minutes proved more positive than expected.

• The pound climbed over 1.66, posting a two and half cent gain against the dollar as the minutes from the Bank of England’s October monetary policy meeting struck a less dovish tone than recent comments suggested.
  
• Analysts said the most important story within the release was the fact that in the September meeting, governor Mervyn King thought an expansion of the central bank’s quantitative easing programme could be justified. But there was no mention of that in this latest meeting.
  
• Additionally, the pound was given further support after Mr King said in an opinion piece in Scotland’s Herald newspaper that, “it would be wise to take account” of the prospect of higher interest rates, heightening confidence in the UK economy.
  
• The dollar is up slightly in morning trading as a raft of Chinese data, though positive, failed to offer any major surprises, gaining in line with market expectations.

The pound posted a one cent gain against the euro yesterday, buoyed by the MPC minutes

Sterling reached a one-month high against the single currency, rallying strongly as the BoE’s latest policy meeting made no mention of further QE.

• The MPC minutes gave substantial support to the pound, which advanced 1.1% to reach a high of 1.1112, after they sounded a more positive tone than recent statements from policymakers suggested.
  
• It was revealed that the nine member committee had voted unanimously to leave the size of its asset purchase scheme unchanged at £175 billion, as had been widely expected, and made no direct reference to extending QE in the future.
  
• This perhaps suggests that the more positive macro news flow and the strength in asset prices may be moving the committee towards favouring a pause in quantitative easing at their November meeting.
  
• Later in the day, the pound capped its gains, consolidating below 1.11, with investors now awaiting retail data released today at 09:30BST.
  
• In addition, analysts noted that the eagerly awaited GDP figure on Friday could call a sharp halt to sterling’s recent rally should it fail to meet expectations of a 0.1% growth rate.