In a similar way to the sterling / aussie pairing, the pound crept higher against the kiwi yesterday as investors remained cautious of riskier assets.

• Higher-risk currencies have come under pressure since the announcement from China that they are going to start tightening policy.
  
  
• In trading this morning, sterling is continuing to edge higher, with investors cautious ahead of the Reserve Bank of New Zealand's interest rate decision due this evening at 20:00.

Conflicting data of aussie inflation and the UK economy moving out of the recession led to minor gains for the pound.

• Australian CPI data showed that inflation was up higher than expected last quarter. The figure rose to 0.5%, higher than the forecast 0.4%.
  
  
• This lead to an increase in demand for the aussie dollar as it heightened the expectations that interest rates will rise after the next meeting of the central bank.
  
  
• Data showing that UK has finally emerged from recession allowed the pound to par its gains, though demand remained weak with the figures disappointing expectations.
  
  
• Putting real pressure on the aussie though is the continued wave of risk aversion that has swept the markets following China's decision to curb spending, and the pound has continued to gain marginal ground this morning.

Euro reversed earlier gains due to the increased risk-adverse trading on news out of China and the ongoing concern surrounding the peripheral eurozone

• Risk aversion following reports from China offset news that German business sentiment has improved month-on-month, raising hopes that German economic growth is not stalling.
  
  
• In the afternoon, data showing that US consumer confidence is still on the rise provided further support for the greenback.
  
  
• The confidence survey reported a reading of 55.9, some way above the forecast level of 53.6, and a solid improvement from the previous month.
  
  
• In trading this morning the pair are holding relatively steady. The price currently is hovering some way below 1.41, with a possible move to the downside as investors await a statement on US policy due this evening.

Sterling reversed Monday's gains, falling a full cent, or 0.6%, against the greenback after a large sell off in the wake of disappointing UK GDP data.

• The low preliminary GDP figure saw investors drop the pound, even though it did reveal that Britain has now left the recession.
  
  
• The data served a blow to hopes that the economic recovery in the UK is firming. Although later revisions to the GDP may show a stronger figure, there are clearly still headwinds to be faced.
  
  
• The dollar was also supported by continued risk aversion from news that China may be tightening its economic policy.
  
  
• China has now implemented higher reserve limits for certain banks to cool off its rate of economic growth. This has raised concern that global economic growth could slow, which has caused a wave of risk aversion in the market, benefitting the US dollar.
  
  
• In trading this morning, the pair is holding steady around the closing price. Dollar maybe on the back foot later as investor await the Fed's latest interest rate decision, due at 19:15.

In early trading yesterday the pound fell sharply following weaker-than-expected UK growth figures, but through the afternoon session it recouped thes

• Sterling fell heavily in the morning after UK fourth quarter GDP data revealed growth of just 0.1%, some way below the forecast level of 0.4%.
  
• This shows that the UK economy could very easily move back into negative growth this quarter.
  
• The GDP numbers have spurred the belief that the quantitative easing programme will come to end next month, though it is still unlikely that interest rates will be raised again for sometime.
  
• However, ongoing negative sentiment toward the eurozone enabled the pound to rally through the day, steadily regaining its losses to close just marginally below the opening price.
  
• In trading this morning, the pound is pushing higher once again, with the 1.15 mark providing resistance.
  
• MPC member Andrew Sentance, who is generally regarded as bullish member of the committee, is due to speak at 09:30.