Sterling reversed slide against aussie, as UK economic recovery hopes were renewed

The pound capped its four-day slide against the aussie yesterday, buoyed by renewed support for the UK’s economic recovery.

• Following from positive services figures last week, the UK economy was given another boost as a manufacturing production reading came in higher-than-expected at 0.9%.
  
• Additionally, European stocks also continued to show strength, with the FTSE100 briefly pushing past 4950, which supported sterling’s rally.
  
• In Australia, figures yesterday showed that business confidence hit a 6-year high in August, adding to mounting speculation that local rates could rise in coming months.
  
• However, this data, which drove the aussie forward against the dollar, was unable to impact on sterling which repealed some of its recent losses to trade up 0.2%.
  
• The Australian economy suffered a setback this morning as retail figures for July were down on the previous month, which has put pressure on the aussie, allowing sterling to rise 0.5% in trading so far today.