Pound is moving higher against the kiwi dollar supported by an upwardly revised UK GDP figure

The pound posted gains of nearly two cents against the kiwi dollar yesterday as demand dulled for riskier assets following weak US data and lower equities.

• Kiwi was again under pressure as investors continued to take the opportunity to cash profits as risk appetite waned after the US 3Q GDP figure was revised downward.
  
• In addition, equity markets turned negative with US benchmark indexes opening with small losses, which supported a return to the US dollar, softening demand for the kiwi.
  
• The loss of risk appetite brought the sterling/kiwi price to a two week high back over 2.29, though a further reiteration of low US interest rates in the evening did see the New Zealand dollar trim its losses.
  
• In trading this morning, the pound has posted gains after the UK 3rd quarter GDP figure was revised upward.

Sterling posted gains vs the aussie yesterday but a bullish speech from an RBA official overnight has the aussie trading strongly today

The pound reversed its downward trend against the aussie, but closed someway from its intra-day high as investors started to sell the dollar towards the end of play.

• Risk appetite was soft during trading on the back of negative news from various parts of the global banking industry. In both China and Germany, banks were under pressure to raise funds, which dented demand for high-risk currencies.
  
• In addition, data showed that the US economy in the third quarter grew at a slower pace than previously estimated which reduced demand for higher-yielding aussie.
  
• Further adding to negative risk sentiment was a weaker-than-expected report on US home prices in September, which rose for the fifth straight month, but at a slower rate.
  
• In later trading though, the aussie pared its losses, finding support as a report from the US Fed reiterated the need to hold rates at their present levels.
  
• This morning aussie is broadly stronger following a speech from Deputy RBA Governor Ric Battellino, who said that, "with the economy having only recently entered a new upswing, it is reasonable to assume that we will see this growth extended for a few more years yet."

Euro enjoyed a late rally to post marginal gains against the dollar and is up over 1.50 today

Having held onto gains through most of the European and US sessions, the dollar slipped back late in the day to close marginally down on the euro.

• The greenback found support after data revealed the US economy had not expanded by as much as had been previously estimated, with its GDP figure revised downward to 2.8%.
  
• A wider trade deficit and lower nonresidential business investments contributed to the lower third-quarter GDP number.
  
• Risk appetite was also dented by concerns over the global banking industry. In China, there were reports that a number of banks would be forced to raise capital. In Germany, state-backed lender WestLB searched for funds to help unload toxic assets from its books.
  
• The euro recouped some of its losses though as a key measure of German business sentiment beat forecasts, triggering optimism the eurozone's biggest economy is recovering at a healthy rate.
  
• Additionally, a strong US consumer confidence survey figure encouraged investors to take up risk trades, buoying demand for the single currency.
  
• In the late evening, further pressure was mounted on the dollar after the Federal Reserve said it expected a slow recovery with high unemployment, affirming expectations it will keep rates low for some time.

US dollar moved higher against the pound yesterday, but is being broadly sold again this morning

The US dollar trimmed strong early gains against the pound after a Federal Reserve statement left a negative dollar tone in the market going into the close.

• Risk sentiment again seemed to be off the table in trading yesterday after the US 3rd quarter GDP figure was revised downward to show that the economy only expanded at a rate of 2.8%, down from a previously estimated 3.5%.
  
• The data showed a wider trade deficit and lower consumer spending than previously thought, which encouraged investors to drop riskier assets.
  
• In the UK, speaking to the parliament's Treasury Committee, BoE Governor Mervyn King said considerable uncertainty about the economic outlook remained and that it would still take a long time for the level of output to return to more normal levels.
  
• Analysts said the comments offered little new in terms of policy outlook for the economy, which kept the pound under pressure.
  
• In the evening though, the dollar came under pressure, capping its gains, after the minutes from the Fed's most recent meeting reiterated the need to maintain their low interest rate policy.
  
• Dollar selling has continued this morning, with the pound currently trading 0.75% higher, pushing the price back over $1.67.

Sterling edged lower against the euro yesterday, but has founds slight support in trading this morning

Having touched on twelve-day low against the euro in early trading, the pound recovered most of its losses to close the day just 0.1% lower at 1.1083.

• The single currency found early support after a strong reading of German business sentiment, which exceeded forecasts, instilled some optimism about the euro zone economy.
  
• The firmer than expected German sentiment survey offset worries over the banking sector brought on following reports that German regional bank WestLB was struggling to secure funding.
  
• The Bank of England's Treasury Select Committee remained cautious on the strength of the economic recovery yesterday saying that the UK economy still faces "profound challenges," fueling speculation the bank may extend asset purchases as the recession persists.
  
• The Bank's testimony offered little new insight into the outlook for monetary policy, which kept pressure on the UK currency.
  
• Market participants added that reports from ratings agencies focusing on the weakness of major banks around the world were also weighing on sterling, given the economy's dependence on financial services.
  
• This morning the pound has moved higher following the 0.1% upward revision of the UK's 3rd quarter GDP figure to -0.3%.