Aussie hits new highs on sterling weakness and a rise in demand for higher-yielding currencies

Selling pressure on the pound and demand for higher-risk currencies saw the aussie advance to a fresh twenty-year high of 1.8464 against the pound.

  • Remarks by Bank of England Governor Mervyn King to a regional newspaper published yesterday underscored the central bank’s lack of concern about the weakness of the pound, which sent the currency spiraling.
  • The aussie received further support as investors shifted funds into higher-risk currencies after the US Fed bolstered expectations that interest rates would remain low for some time.
  • Risk appetite was also encouraged after the G20 meeting, where a statement showed signs that that global stimulus measures would remain in place, buoying demand for the Australian dollar.
  • In trading this morning, the pound’s downward trend has continued as confidence in the currency remains weak, with the aussie pushing on another cent with trading currently around 1.8450.