Pound has failed to capitalze on yesterday's gains, already down 0.8% against the aussie today

A pullback in equity markets impacted negatively on investor appetite for riskier currencies yesterday, enabling the pound to rally slightly.

• Sterling reversed a five day slide against the aussie as traders booked profits following quiet trade in Asia, where markets in Japan, and Singapore were closed for holidays.
  
• With little data or direction in the aussie market, in the absence of commodity trading, investors took the opportunity to cash profits, which enabled a broadly weak pound to make slight gains.
  
• Additionally, with the US interest rate statement and minutes from the UK monetary committee policy meeting both being released tomorrow, there is also the potential for volatility in the market over the next few days which could leave traders exposed.
  
• However, the aussie has advanced strongly in trading today, owing much to the rally in the kiwi, which leapt to a 13-month high against the US dollar.
  
• Confidence in higher risk currencies has risen following upbeat news from New Zealand’s largest dairy exporter, helping the aussie to climb 0.6% against sterling in trading today.