He says this:

"Next, we turn to our short-term model trading signals. This week, the model suggests going long GBP and CAD against AUD and CHF. Medium term momentum has become supportive of sterling (despite the recent short-term setback) and also for CAD which at the same time saw an increase in 2Y swap rates on a monthly basis. At the same time, the recent big sell off in the Australian dollar did not go unnoticed by our model which now ranks AUD as the worst momentum play in the G-10 universe."

11:10: GBP/AUD continues to enjoy strength

The standout currency action for us continues to be that involving the pound versus the Australian dollar.

Greg Gibbs at RBS says the decline in the Australian currency had been expected:

"We have been forecasting a weaker AUD later this year on a peaking in the resource investment cycle, a weaker outlook for China and prospect of a stronger USD as a sustained recovery moved it close to a halt in its QE policies.

"This view has gained traction and the technical break through 1.02 found willing sellers on medium fundamental grounds.

"It is possible for the AUD to slip further."

11:00: Busy week for sterling lies ahead

Next week will be a busy one for sterling - data releases could well prompt the euro / pound exchange rate to break out of the well established 0.84-.85 range.

"Next week's data calendar in the UK is well stocked. Potential drivers for sterling are CPI, BoE minutes, CBI report, retail sales and the preliminary GDP 1Q13," say UniCredit Bank in a weekly currency note.

10:25: GBP recovers early 2013 losses against Australian dollar

Vaughan Atton at UKForex is forecasting further GBP strength against the Australian dollar:

"It has taken 5 months, but the losses incurred during the first Quarter of this year between GBPAUD and been retraced. The pair has smashed through resistance to test 1.5650 this morning, testing the highest level since January 1st and a major technical level, which if broken would set the pair up for a rally to 1.60."

7:50: GBP firm ahead of market open

The British pound sterling (Currency:GBP) is looking firm across the board as we approach the market open in London:

The pound to euro exchange rate is 0.04 pct in the red at 1.1850.
The pound to US dollar exchange rate is 0.17 pct lower at 1.5243.
The pound to Australian dollar exchange rate is 0.5 pct higher at 1.5646.