A lack of market confidence in the UK economy will lead to Sterling selling pressure on rallies.

Sterling pushed to highs around 1.9730 against the dollar during Thursday and touched the 0.74 resistance level against the Euro. The UK currency was still gaining some support from a reduction in market expectations over the scope for Bank of England interest rate cuts over the remainder of this year.

There were no major domestic developments during Thursday and the UK currency failed to hold the best levels as profit taking emerged. Sterling was also undermined by a renewed increase in risk aversion and persistent underlying doubts over the UK fundamentals, especially after the bank’s downbeat growth outlook in Wednesday’s quarterly report.

The UK currency was fluctuating around the 1.97 level on Friday with markets struggling to find fresh direction. Subsequently, Sterling weakened towards 1.9620 against the dollar and back towards 0.7480 against the Euro as markets questioned the UK outlook.