NZD - £ also rose a full cent against the kiwi yesterday, with investors cautious ahead of the Reserve Bank of New Zealand's interest rate decision

• In the evening, New Zealand's central bank reaffirmed that it saw no need to raise rates before mid-year given tame inflation.
  
  
• Expectations of a rate rise in March have dipped following the Bank's announcement, though the kiwi is trading marginally higher this morning following Obama's speech.
  
  
• Asian shares took a boost from the US President's comments, buoying demand for higher-risk currencies. The price at the moment is hovering above 2.28.

AUD - The pound moved nearly a cent higher against the aussie dollar yesterday, buoyed by comments from a BoE policymaker.

• The pound made it to three consecutive days moving higher against the Australian currency, with fears about the global recovery stifling demand.
  
  
• However, investors have gone back to aussie buying this morning, relieved after President Obama did not sound too forceful on the banking overhaul during his State of Union address.
  
  
• Currently the aussie is only up around 0.2% though, with the price still hovering above 1.80 with traders apprehensive about possible hiccups in the re-appointment of Ben Bernanke as the chairman of the Fed.

€/$ € 6-month low yesterday, moving as low as $1.4021. Concerns over eurozone recovery persisted following a positive tone from the US Fed Reserve.

• In early trading, the pair held relatively steady as the market awaited news from the Fed's latest policy decision.
  
  
• The euro steadily weakened though with both European and US stocks opening lower.
  
  
• At the end of its two-day meeting, the Federal Open Market Committee kept rates unchanged, as expected, but also said that it intended to end some emergency lending and asset-buying programmes.
  
  
• Having dipped briefly dipped below $1.40 in trading this morning, the euro has recovered slightly, after Obama did not make any strong remarks about the bank regulation plan.

£/$ Bouyed by comments from a BoE policymaker, £ was able to post hestiant gains against $ yesterday, though its upward movement was limited.

• BoE policy board member Andrew Sentance alluded to the possibility that rising inflation would lead to an imminent end to the quantitative easing programme.
  
  
• He did add though that the economy, which on Tuesday was shown to have just barely made it out of recession in the fourth quarter, was facing opposing pressures which the central bank would have to consider in its Inflation Report next month.
  
  
• In the evening the dollar received a slight boost after the Fed struck an optimistic tone at the end of their two day meeting.
  
  
• Although they kept rates unchanged as expected, one board member dissented on the decision, saying that the Fed should remove the phrase vowing to keep the rate low for "an extended period."
  
  
• In trading this morning, the pound is continuing to climb, nearly up a cent on the day following a speech from Obama, which eased market worries about moves to regulate US banks.

£/€ The pound resumed its upward trend against the euro yesterday, climbing a further half cent to close back above 1.15

• Sterling found support following comments on inflation from a Bank of England policymaker who spurred speculation that the central bank may end quantitative easing next week.
  
  
• Andrew Sentance said that it could be hard to maintain the target inflation rate if import and export prices keep rising.
  
  
• The market took the comments to suggest an imminent end to the BoE's £200 billion asset-buying plan, but analysts said they did little to change the view that interest rate rises will not follow until the second half of the year at the earliest.
  
  
• Traders brushed off a weak reading of UK retail sales earlier in the day, while UK corporate demand also helped the pound to recovery from losses incurred after the weaker-than-expected growth figure.
  
  
• In trading this morning, sterling has reached a five-month high at 1.1593, already up nearly 0.5% for the day.

In a similar way to the sterling / aussie pairing, the pound crept higher against the kiwi yesterday as investors remained cautious of riskier assets.

• Higher-risk currencies have come under pressure since the announcement from China that they are going to start tightening policy.
  
  
• In trading this morning, sterling is continuing to edge higher, with investors cautious ahead of the Reserve Bank of New Zealand's interest rate decision due this evening at 20:00.

Conflicting data of aussie inflation and the UK economy moving out of the recession led to minor gains for the pound.

• Australian CPI data showed that inflation was up higher than expected last quarter. The figure rose to 0.5%, higher than the forecast 0.4%.
  
  
• This lead to an increase in demand for the aussie dollar as it heightened the expectations that interest rates will rise after the next meeting of the central bank.
  
  
• Data showing that UK has finally emerged from recession allowed the pound to par its gains, though demand remained weak with the figures disappointing expectations.
  
  
• Putting real pressure on the aussie though is the continued wave of risk aversion that has swept the markets following China's decision to curb spending, and the pound has continued to gain marginal ground this morning.

Euro reversed earlier gains due to the increased risk-adverse trading on news out of China and the ongoing concern surrounding the peripheral eurozone

• Risk aversion following reports from China offset news that German business sentiment has improved month-on-month, raising hopes that German economic growth is not stalling.
  
  
• In the afternoon, data showing that US consumer confidence is still on the rise provided further support for the greenback.
  
  
• The confidence survey reported a reading of 55.9, some way above the forecast level of 53.6, and a solid improvement from the previous month.
  
  
• In trading this morning the pair are holding relatively steady. The price currently is hovering some way below 1.41, with a possible move to the downside as investors await a statement on US policy due this evening.

Sterling reversed Monday's gains, falling a full cent, or 0.6%, against the greenback after a large sell off in the wake of disappointing UK GDP data.

• The low preliminary GDP figure saw investors drop the pound, even though it did reveal that Britain has now left the recession.
  
  
• The data served a blow to hopes that the economic recovery in the UK is firming. Although later revisions to the GDP may show a stronger figure, there are clearly still headwinds to be faced.
  
  
• The dollar was also supported by continued risk aversion from news that China may be tightening its economic policy.
  
  
• China has now implemented higher reserve limits for certain banks to cool off its rate of economic growth. This has raised concern that global economic growth could slow, which has caused a wave of risk aversion in the market, benefitting the US dollar.
  
  
• In trading this morning, the pair is holding steady around the closing price. Dollar maybe on the back foot later as investor await the Fed's latest interest rate decision, due at 19:15.

In early trading yesterday the pound fell sharply following weaker-than-expected UK growth figures, but through the afternoon session it recouped thes

• Sterling fell heavily in the morning after UK fourth quarter GDP data revealed growth of just 0.1%, some way below the forecast level of 0.4%.
  
• This shows that the UK economy could very easily move back into negative growth this quarter.
  
• The GDP numbers have spurred the belief that the quantitative easing programme will come to end next month, though it is still unlikely that interest rates will be raised again for sometime.
  
• However, ongoing negative sentiment toward the eurozone enabled the pound to rally through the day, steadily regaining its losses to close just marginally below the opening price.
  
• In trading this morning, the pound is pushing higher once again, with the 1.15 mark providing resistance.
  
• MPC member Andrew Sentance, who is generally regarded as bullish member of the committee, is due to speak at 09:30.