The pound posted strong gains vs kiwi on the back of rising risk aversion

Sterling hit a 6-day high against the kiwi yesterday as a sharp spike in risk aversion hurt sentiment toward the higher-yielding currency.

• Sterling initially fell by another half cent against the kiwi yesterday following surprisingly weak economic data emerging from the UK.
  
• However, the pound recovered its losses in the afternoon to close at 2.3926, up 0.7%, as investors sold off riskier currencies in light of falling global stock prices.
  
• Leading stock indices in Europe and the US fell by nearly 2% as traders withdrew from risk activity sparking concern over the pace of the global economic recovery.
  
• Analysts said that there was little substance to cause the risk aversion and that it was more the psychology of the market deciding to turn.
  
• In trading this morning, the kiwi has pared its losses, with the pairing now trading 0.2% lower than yesterday’s close.