Aussie falls to 7-week low against sterling

The Australian dollar fell to near 7 week lows against sterling yesterday, as the aussie was hit by further falls in commodity prices.

• Australia is one of the world's leading commodity exporters so falls in prices will generally put pressure on the aussie.
  
• The local currency also gained little support from the RBA's minutes, which stated there was no pressing need for the central bank to cut rates further.
  
• However, analysts remain concerned that the ongoing pressure on funding costs would put upward pressure on mortgage rates. This was verified by the country’s leading mortgage lender raising its variable mortgage rate. This has increased speculation that the central bank may have to cut rates further.
  
• Sterling also received a boost yesterday from firmer than expected inflation data, which showed CPI prices fall to 2.2% in May. Analysts had expected a bigger fall and it helped increase speculation that the chances of deflation were now quite low.