The pound Australian dollar exchange rate is 0.35% higher on the day with GBP AUD at 1.5732. The pound New Zealand dollar exchange rate is 0.22% higher with GBP NZD at 2.0025. This morning the risk-on sentiment that dominated Asian trade has disappeared. This serves to show that it is Europe, understandably, that is driving the agenda on global financial markets at present - Europe and Asia are merely following the precedent set in the European session. As concerns about the European debt situation arise once more markets are witnessing a sell-off. Nevertheless, the Australian dollar and New Zealand dollar have made good progress in recent sessions. A second consecutive month of contraction in Australian business confidence data failed to weaken the aussie dollar. Further positive risk sentiment was the deciding factor; the Nikkei stock index gained by almost 2.0% yesterday. The USD/AUD pair climbed up through parity last night as well, though it has dipped below this benchmark since with market nerves towards the Slovakian EFSF vote creeping in. Sterling is trading another cent lower at 1.57 this morning. Risk currencies rose fast yesterday and today’s could be a more cautious session. Sterling gave away another cent yesterday as the New Zealand dollar continues to rebound. A New Zealand government report revealing a record budget deficit, much worse than expected, failed to impact on the kiwi dollar’s performance. Continued optimism surrounding the eurozone situation is the main driver here, but this upturn in sentiment may well have run its course, helping sterling to avoid further losses.

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