The Bank of England decision to resist an increase in the quantitative easing asset-buying programme will provide some near-term relief to Sterling, but there is still likely to be aggressive selling pressure on significant rallies.
Sterling held little changed on Wednesday with further selling pressure above 1.6550 against the dollar. The visible trade deficit was unchanged at GBP6.5bn for July. There was a tentative increase in import and export volumes which could offer some degree of support, but the data did not have a major impact on the currency.
Sterling drew underlying support from an underlying improvement in risk appetite and pushed to a high near 1.66 in US trading as the dollar also stumbled. Nevertheless, the UK currency was again unable to hold above 1.6550 in choppy trading.
At the latest policy meeting, the MPC held interest rates at 0.50% and also help the asset-purchase buying programme at GBP175bn which is due to be completed within two months.