Sterling climbed higher against the aussie at the end of last week, but aussie buying as resumed this morning

The pound built on substantial gains from Thursday, hitting a three-week high against the high risk aussie dollar on Friday as investors pared back carry trades.

• Concerns over the Dubai defaulting on their debts led to a shift in risk sentiment at the end of last week, which dulled demand for the Australian currency.
  
• The sudden loss of risk in the market saw carry trades unwound as investor recouped their risky assets and bought back safe-haven currencies.
  
• The movement enabled the rally strongly against the higher-yielding aussie, posting a 3-week high of 1.8235, before capping its gains and closing the week at 1.8194.
  
• However, in trading this morning, the more common trend has resumed as fears that Dubai may not repay its multi-million dollar debt abated slightly, with the aussie rapidly recovering its losses as risk appetite returns to the table.
  
• The aussie is currently up over a cent against a broadly weaker British pound, which has come under pressure following a weak consumer confidence survey.