Sterling capped it gains vs aussie following 0.6% GDP growth rate

The Australian dollar started to reclaim its losses yesterday following a positive second quarter GDP figure.

• Demand increased for the aussie yesterday following a better-than-forecast 0.6% quarterly growth rate which buoyed investor sentiment as it suggested that interest rates could still rise later this year.
  
• However, the aussie’s gains were capped after US stocks fell for the fourth day, with the pound closing down just half a cent at 1.9506.
  
• In trading this morning the pound has continued to lose ground with investors seemingly unnerved by Australia’s worse-than-expected trade balance figure, which was a full billion dollars further in the red in August than in July.
  
• The riskier aussie dollar was also supported by a rally in Chinese equities during eastern trading, with the Shanghai Composite closing up nearly 4.0%, which encouraged investor demand.