Risk aversion has returned to the market with a vengeance. The USD has steamrolled the Pound this week reaching a high of 0.6426 GBP per USD on Thursday. US trade figures were the lowest in 21mths while Chinese data under-performed earlier in the week. Not helping the GBP, consumer confidence dipped while the Bank of England’s quarterly inflation report highlighted growth expectations had been trimmed and UK real interest rates are likely to remain negative for a good time to come.

Early this week the Aussie and Kiwi slid after disappointing Chinese data and Australian business confidence halved. With signs global growth is on a downer investors chose to dump the risky pair. The selloff extended to the Euro which fell to 0.8200 against the GBP after talks of the European Central Bank stepping in to bail out Ireland. Late this week the three have managed to turn tail with the Aussie most notably recovering almost all of the week’s losses.

Many thanks

Jon Sermon
Alliance Manager