Sterling relinquishes gains posted yesterday vs kiwi as risk aversion abates

The pound continued to post strong gains against the New Zealand currency yesterday, regaining another 1.0% to close at 2.4157.

• Equity markets continued to trade in the red yesterday which put selling pressure on “riskier” assets, driving the kiwi lower.
  
• Additionally, data in the US revealed that job losses were still high, far more than had been expected, with the ADP non-farm employment change producing a figure of 298K for August, which further hindered the kiwi’s progress.
  
• In the UK, an improved figure for conditions in the construction industry brought relief from a string of negative economic data, encouraging demand for the pound.
  
• However this morning sterling has started to relinquish its gains part due to a rebound in Chinese shares that eased aversion to riskier, higher-yielding currencies.