All the energy- and commodity-related currencies had a relatively difficult week, held back by softer prices for their exports. The Australia dollar suffered alongside its Canadian cousin, losing a cent to sterling and remaining unchanged against the US dollar. The Reserve Bank of Australia complicated things for the Aussie with its monetary policy statement. It said the strength of the currency made an interest rate increase less necessary. The comment put an end to the Aussie's attempt to break above the psychological resistance at US$0.80 that has blocked its way in the past.
A decent start to the week by sterling was followed by an ignominious end to it after the Bank of England's quarterly Inflation Report painted a quite dismal picture of the UK economic outlook. The bank sees further erosion of real consumer spending power as wages fail to keep pace with rising prices. It could be many months until the bank takes interest rates higher.