Dollar hits 26-year high against pound

THE Australian dollar surged to a 26-year high against the pound, as fears of a Greek default subsided following a successful vote on a key austerity package.

The local currency rallied to 66.68 pence today, the highest level since 1985, before falling back slightly to 66.65 pence.

Against the US dollar the Australian dollar rose to a three-week high 107.46 cents and at 12pm (AEST), the Australian dollar was trading at 107.03 US cents, up from 105.85 cents yesterday.

The Australian dollar also rose against the euro and yen.

Greek politicians voted overnight for a package to slash 28.4 billion euros ($A38.9 billion) from government spending by 2015, in the first stage of a two-part vote aimed at unlocking emergency finance from the EU and the IMF. The second vote is on Thursday.

CMC foreign exchange dealer Tim Waterer said the Australian dollar was one of the strongest performing currencies, after risk sentiment recovered following the encouraging news from Greece.

"(It was) a pretty remarkable rebound, really, when you look at the course of events this week," Mr Waterer said.

"It's pushed two US cents higher in the last 36 hours and it's three cents higher than its 104 (US cents) low earlier in the week."

Mr Waterer said the Australian dollar did not react to the two pieces of data that were released on Thursday.

Total credit provided to the private sector by banks and other lenders rose 0.3 per cent in May, according to the Reserve Bank of Australia (RBA).

The Australian Bureau of Statistics reported that the number of job vacancies in Australia had fallen 4.5 per cent in the three months to May.

Mr Waterer said the focus may shift to local economic data next week, when the central bank meets on Tuesday for its monthly monetary policy meeting.

The Reserve Bank has kept the cash rate at 4.75 per cent since November last year and is widely expected to keep interest rates unchanged in July.

"That will be very closely monitored," Mr Waterer said.

"Not so much the move on the rate but what the rhetoric is in the statement."

He said the domestic currency may trade between 106.45 US cents and 107.20 US cents for the remainder of the local session today.

Since 7am the local unit traded between 106.68 US cents and 107.17 cents.

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