Falling Asian stocks have enabled sterling to reverse its slide vs the kiwi

Broad selling pressure on the pound on Friday enabled the kiwi to advance another two cents (0.9%), with the price falling down to 2.2934.

• The pound suffered as the fragility of the UK banking sector was underlined with Lloyds Banking Group unable to break free of the government’s asset purchasing scheme due to a tightening of regulations.
  
• Also weighing on the pound was an increase in public net borrowing which fed into the story that the fiscal situation is not going to get any better any time soon.
  
• Overall, higher-yielding currencies traded down on Friday as weaker commodity markets and a rise in risk aversion hastened investors into haven currencies, but this was outweighed by sterling weakness, enabling the New Zealand currency to advance.
  
• However, in trading this morning, sterling has rebounded, paring its losses as demand for higher-yielding currencies was dampened by falling Asian stocks.