Kiwi strenghtened broadly yesterday, but the pound has stemmed its losses in trading this morning

Better-than-expected GDP figures in the US caused risk appetite to surge across the board enabling the kiwi to post gains of over a cent against the pound.

• The solid GDP figure in the US renewed optimism about recovery in the global economy, prompting investors to buy higher-yielding currencies.
  
• The kiwi, which has suffered recently on a rise in risk aversion, was able to reverse losses as the positive data encouraged investors to buy up riskier assets.
  
• However, in trading this morning, the pound is recouping losses, pushing the price back near 2.27 as market participants return their thoughts to the RBNZ's rate statement on Wednesday where they indicated that interest rates would not be raised for some time.

With the US exiting recession, investors moved into higher-yielding assets bossting the aussie

The aussie dollar reversed recent losses yesterday after positive US GDP data encouraged investors to buy-back into perceived riskier currencies.

• The aussie pulled back nearly two cents, or 1.0%, bringing the sterling/aussie pair back down to trade around 1.80 as the data spurred demand for risk.
  
• Investors have been cashing profits in the Australian currency recently as global equities took a downturn, but yesterday's figure saw traders revive long positions in the aussie.
  
• Analysts noted that the figures were a near-perfect combination for riskier assets: strong enough to encourage those with an optimistic outlook on the financial markets, but not too strong to generate expectations of accelerated monetary tightening from the Federal Reserve.
  
• In trading this morning, the pound has halted its fall and is currently trading up around 0.2% with price hovering above 1.8100.

Euro clawed back recent losses as investors moved into the "riskier" currency

The dollar snapped four days of gains against the euro as the US economy returned to growth in the three months through September, officially exiting recession.

• The US government's advance estimate showed gross domestic product grew at an annualised rate of 3.5% in the third quarter, the first rise since the second quarter of 2008, which beat expectations for a reading of 3.3%.
  
• The data reduced the safe-haven appeal of the greenback, encouraging investors to sell their dollar holdings in favour of growth-linked currencies, enabling the euro to climb over a cent on the day.
  
• Analysts did note however, that concern may still linger over whether the US economy will be able to sustain this level of growth as the government begins to unwind its stimulus packages.
  
• In addition, trading yesterday saw the European Commission's economic sentiment indicator post a bigger-than-expected October rise. The index for the eurozone rose to 86.2 from 82.8 in September, beating expectations and lending support to the single currency's rally.

Positive GDP figures in the US drove dollar selling yesterday enabling the pound to gain

Sterling extended its rally, briefly climbing above $1.66 as the dollar sold off broadly after strong economic growth data spurred demand for riskier assets.

• In early trading, the pound found support from data that showed UK mortgage approvals for September increased to their highest level since February last year, exceeding market forecasts.
  
• Risk appetite was buoyed further in the afternoon after a report showed the US economy returned to growth in the third quarter, boosting stocks and reducing the appeal of the relative safety of the greenback.
  
• The US economy in the third quarter grew by 3.5% on an annualised basis, beating market expectations of a 3.3% rise and easing recently voiced concerns over the strength of the US recovery.
  
• Analysts noted that with the US GDP figure meeting market expectations, market players returned to using the dollar to fund carry trades, driving the US currency lower.
  
• The gains of 1.0% helped propel sterling toward its first monthly advance versus the dollar since July.
  
• However, gains were capped as the Labor Department revealed that unemployment claims inched lower in the week to 530K but missed forecasts of a drop to 520K.

Pound extended gains against the euro, buoyed by positive economic data

The pound continued to rally yesterday and is now poised to snap a three-month decline versus the euro, as the UK showed positive economic signals.

• Data from the Bank of England revealed that UK net consumer lending rose less than expected in September but the number of loans approved for house purchases did hit its highest level in 18- months.
  
• Mortgage approvals rose to 56,215 from a revised 52,970 in August, which is the highest level of approvals since February last year and marks a solid recovery from September 2008 when only 33,419 mortgages were approved.
  
• The more positive data saw traders trimming excessive short positions in the pound, enabling the UK currency to briefly extend gains over 1.12, and suggesting that the markets may have overreacted to the surprisingly weak GDP data last week.
  
• Analysts noted that the UK currency also benefited as the euro fought to stem its broad slide this week, as traders saw the slump in global equities earlier in the week as a sign to sell the single currency.