Kiwi was higher in trading yesterday and is continuing to press higher against the pound this morning

The pound fell back sharply against the kiwi dollar yesterday, losing two and a half cents from a two-month high to close back below 2.30.

• The higher yielding kiwi dollar found support as risk appetite found its way back into the market after the UAE central bank agreed to provide support for the ailing Dubai banks.
  
• The kiwi rose some 1.1% as demand for the New Zealand currency strengthened and risk appetite found its way back in to the market following the encouraging news.
  
• Meanwhile, sterling was under heavy pressure in the wake of a weaker-than-expected consumer confidence survey, which highlighted the fragile state of the domestic economy.
  
• In trading this morning, the kiwi is climbing higher, up over a cent so far today, as news that Japan may expand quantitative easing as led investors to sell the Japanese yen in favour of the riskier New Zealand dollar.

The high-yielding aussie posted solid gains against the pound, supported by a return to risk

The aussie dollar trading strongly yesterday, advancing near 1.4% against a broadly weaker pound, as the UAE central bank eased concerns about the health of Dubai's financial sector.

• The news buoyed demand for riskier assets, which had come under pressure last week as Dubai's debt issues undermined confidence in the global economic recovery.
  
• Adversely, the pound came under heavy pressure during trading in the wake of a UK consumer confidence survey that showed the lowest rating in ten months.
  
• In the early hours of this morning, the aussie found renewed support after the Reserve Bank of Australia decided to raise their base interest rate by a further 0.25%.
  
• The aussie dollar has backed off slightly following the initial spike following the RBA's decision, as the upward rate movement was in line with market expectations and had already been priced in.
  
• Analysts now expect that the RBA may slow their rate of tightening, having raised rates for three straight months, which will enable other nations to close the yield gap.

A return to risk as concerns in Dubai eased enabled the euro to post gains against the US dollar

The single currency edged higher against the US dollar yesterday, supported by rising risk appetite as concerns over the banking sector in Dubai abated slightly.

• A pledge by the UAE central bank to provide support to Dubai banks quelled some concerns about the health of the area's economy, after Dubai's appeal late last week for more time to repay billions of dollars in debt repay debts shook confidence in global markets.
  
• The move to contain the fallout from the Dubai debt crisis, which last week sparked a surge in haven demand for both the dollar and the yen, boosted investor confidence and weighed on the US currency.
  
• The euro also found support after data revealed an upside surprise in the eurozone CPI inflation rate to 0.6%, having read -0.1% the previous month.
  
• In trading this morning, the euro has continued to press higher, already up over half cent as risk seeps back into the market following the welcoming news that UAE central bank has established emergency liquidity for local and foreign banks working in Dubai.

The pound headed lower aginst the USD yesterday, undermined by weak UK data, though it is recovering this morning

The pound fell to briefly test levels below $1.64 yesterday, under pressure following weak economic data from the UK and on falling stocks in Europe.

• The pound was little changed against the dollar in early trading, having actually risen earlier in the day on the view that Dubai may have avoided the worst of its debt-related problems, which prompted some demand for currencies considered to be higher risk.
  
• However, sterling began to slide back after the headline UK Gfk consumer confidence balance fell unexpectedly from -13 to -17, the sharpest monthly decline for 13 months.
  
• Separately, data showed the fourth consecutive fall in UK consumer credit. This is a trend that is likely to continue as households seek to pay back unsecured credit.
  
• The pound also came under pressure as European stock markets lost further ground, with major indices down over a cent by the close of play. Later in the day though, US equities did turn positive, which saw the dollar cap its gains.
  
• Currently the pound is pushing higher against the US dollar with European equities opening on a positive note.
  
• Investors are now awaiting important manufacturing data to be released today from both the UK and the US.

A weak UK confidence survey yesterday had sterling on the back foot

The pound extended its one-month low against the euro, dipping as low as 1.0925 as demand for the UK currency remained weak.

• Sterling slipped back half a percent on the day after an unexpected fall in British consumer confidence underlined ongoing weakness in the domestic economy.
  
• A monthly GfK survey showed its UK consumer confidence index fell to -17 in November from -13 in October, well below the market forecast.
  
• Analysts said overall demand for sterling may remain sluggish amid evidence which continues to show that the UK economy is struggling.
  
• There was some positive news for the markets though after the UAE central bank agreed to support the indebted Dubai banks.
  
• While analysts said that the financial issues in the hub of the Middle East may have subsided for now, some said sterling was unlikely to rise significantly in the near term as many in the market continue to bet that the UK economy will take longer to recover than other countries.
  
• In trading this morning the pair are holding steady around the overnight close price, although sterling could find slight support if the UK manufacturing PMI index, released at 09:30 shows improvement for November.