Weak US data sapped demand for the aussie yesterday, enabling the pound to gain

The pound rebounded strongly yesterday, gaining over two cents, or 1.3%, as a sharp rise in risk aversion in the market, dulled demand for the ‘riskier’ currency.

• Both unemployment claims in the US and manufacturing data posted worse-than-expected figures, raising slight concerns over the rate of recovery in the world’s largest economy, and weakening demand for the higher yielding aussie.
  
• The negative US data was reflected in global stocks, which also took a steep downturn, with major indices loosing around two percent, which further reduced dollar selling, enabling the GBP/AUD price to rise.
  
• Analysts also noted that the aussie fell prey to light profit taking with investors concerned over speculation that countries are unhappy with the current weakness in the dollar.
  
• In trading this morning, the pound has edged down around 0.2% as investors avoid taking any long positions ahead of important US employment data later this afternoon.