The pound lost ground yesterday as demand for the kiwi soured on positive data and rising risk appetite

Sterling slid over three cents, or 1.5%, against the kiwi yesterday with improved risk appetite favouring higher-yielding currencies.

• Data released in New Zealand showed house prices in the country rose for the first time in 16 months, adding support to the kiwi dollar.
  
• In addition, growing optimism about the state of the Chinese economy, with a raft of economic data being released on Wednesday morning, supported demand for commodity-linked currencies such as the kiwi.
  
• Investors are pricing in positive economic figures from China tomorrow, underscoring the strength of the global recovery and supporting demand for higher-risk assets.
  
• In trading so far today, the pound has resumed its slide against the New Zealand currency after news Britain's AAA sovereign credit rating may be under threat.

The pound has fallen against the aussie, undermined by a comment from Fitch Ratings agency

The pound fell half a cent against the aussie yesterday, as improved investor sentiment buoyed riskier currencies.

• The aussie found support as commodity-linked currencies were lifted by increasing investor confidence about the global economic recovery.
  
• Leading global equity markets rallied by over 2%, which buoyed risk appetite lifting the Australian dollar.
  
• In addition, high-risk currencies were supported as the IMF named the US dollar the currency of choice for funding the carry trade.
  
• In trading this morning, the pound has fallen further after ratings agency Fitch said the UK's sovereign credit rating is most at risk among top-rated nations.

The dollar stumbled in trading yesterday with investors buying into riskier assets as equities rallied

The single currency rose sharply against the dollar yesterday, gaining over one and a half cents in the wake of positive German data to close marginally below 1.50.

• Demand for the safe-haven US currency was muted as equity markets rallied strongly, with analysts noting that investor optimism continued to be supported by last week's pledge from the Federal Reserve to keep interest rates at ultra-low levels for an extended period.
  
• In addition, the failure of the G20 leaders to discuss currencies in their meeting over the weekend implied a continued comfort among authorities with the dollar's recent depreciation.
  
• The euro was able to once again breach the $1.50 level for the first time in two weeks, after figures showed a larger than expected 2.7% rise in German industrial, exceeding market forecasts of a 1.2%.
  
• Data also revealed stronger exports in Germany, which undermined calls that current euro value is burdening economic recovery.
  
• The greenback has pared losses in trading this morning as short-term players move to close out accumulated short positions on the dollar as they prepare for a public holiday in the US.

The pound posted strong gains against the dollar yesterday as risk appetite surged

Sterling traded strongly against a broadly weaker dollar, achieving a three-month high of 1.6842 as investors were given a green light to sell the greenback.

• Rising risk appetite weighed on haven demand for the US currency as global equity markets rallied in the region of 2%, with the Dow Jones reaching its highest point this year.
  
• The dollar also came under pressure in the wake of the G20 meeting held over the weekend. The statement boosted risk appetite by saying it was too early to exit from current economic stimulus policies but made no mention of exchange rates.
  
• Furthermore, a report from the International Monetary Fund also weighed on the dollar as it named the US unit as a currency of choice for funding carry trades, in which low-yielding currencies are sold to fund the purchase of riskier, higher-yielding assets elsewhere.
  
• The pound has reversed gains in trading this morning after Fitch Ratings said the UK is at the most risk of losing its AAA status among major economies.
  
• The UK currency lost over a cent as the news was released, but is consolidating its position over 1.66 with overall sentiment toward the dollar remaining bearish.

After a strong start, the pound lost ground to the euro yesterday in the wake of strong German data

The pound reached a near two-month high in early trading yesterday, but the euro eroded losses following positive data, with the pair closing marginally down at 1.1171.

• The euro found support yesterday after government data showed German industrial output rose more than economists had forecast as factories expanded production to meet export demand.
  
• Figures showed a larger than expected 2.7% rise in German industrial production, exceeding market forecasts of a 1.2%.
  
• In addition, data revealed that German exports jumped by 3.8% in September, which underscores Germany's ability to export even in a strong euro environment and undermines the view of some eurozone finance ministers that euro strength is impeding the ability to export.
  
• Sterling has come under selling pressure this morning after Fitch Ratings agency said that the UK rating faces risks of losing its AAA status because the country needs "the largest budget adjustment." The pound is currently trading half a percent down, hovering just above 1.11.
  
• Investors are awaiting an economic sentiment survey from Germany, released at 10:00, which is forecast to show a further fall this month and could put pressure on the single currency.