The pound trimmed its recent losses against its key counterparts in the European session on Thursday, after the Bank of England left its interest rate and the asset purchase program unchanged and lifted its growth forecast amid indications of recovery from the virus crisis.
The nine-member Monetary Policy Committee, headed by Governor Andrew Bailey, unanimously voted to hold the interest rate at 0.10 percent.
The bank retained the stock of corporate bond purchases at GBP 20 billion and the government bond purchases at GBP 875 billion.
Andrew Haldane voted to continue with the existing programme of UK government bond purchases but to reduce the target for the stock of these purchases to GBP 825 billion from GBP 875 billion.
The minutes showed that one member sought a reduction in the scale of asset purchases in the current programme to GBP 100 billion from GBP 150 billion.
The MPC said the committee did not intend to tighten monetary policy at least until there was clear evidence that significant progress was being made in eliminating spare capacity and achieving the 2 percent inflation target sustainably.
The GDP is expected to rise by around 4.25 percent in the second quarter of 2021.
The central bank raised its GDP forecast for this year, predicting a growth of 7.25 percent versus its prior estimate of 5 percent.
Polling got underway in Scotland for parliamentary elections which could have an impact on whether there will be a second referendum on Scottish independence.
Scottish First Minister Nicola Sturgeon, who heads the pro-independence Scottish National Party, has vowed to hold a second referendum if her party wins a majority in the Parliament.
Final data from IHS Markit showed that the UK service sector grew at the fastest pace since October 2013, driven by sharp increases in business and consumer spending amid easing of restrictions related to the COVID-19 pandemic.
The Chartered Institute of Procurement & Supply services business activity index advanced to 61.0 in April from 56.3 in March. The score was well above the flash estimate of 60.1.
The pound showed mixed performance against its major peers in the Asian session. While it rose against the yen and the franc, it was steady against the greenback and the euro.
The pound was up by 0.6 percent at a 6-day high of 1.3941 against the dollar, after falling to a 2-day low of 1.3857 quickly after the BoE announcement. The pair had finished Wednesday's deals at 1.3901. Further rise in the pound may see resistance around the 1.41 area.
The pound bounced off to 152.12 against the yen, registering a rise of 0.6 percent from a 2-day low of 151.25 it touched at 7:00 am ET. The pair was valued at 151.76 when it ended trading on Wednesday. Immediate resistance for the pound is seen around the 154.00 level.
Minutes from the Bank of Japan's meeting on March 18 and 19 showed that members of the monetary policy board said that the country's economy is showing signs of inconsistent improvement but continues to be threatened by COVID-19.
The pandemic and its different variants continue to shroud the global economic recovery in uncertainty, the minutes said. The members said they will monitor the situation and will take additional easing measures if they're needed.
The pound showed a modest recovery against the franc, with the pair trading at 1.2672. This followed a 3-day low of 1.2599 logged at 7:00 am ET. At Wednesday's close, the pair was worth 1.2687. The pound is likely to find resistance around the 1.28 level.
The U.K. currency recovered 0.6 percent to 0.8638 against the euro, from a 2-day low of 0.8688 seen at 7:00 am ET. The pound had ended yesterday's trading session at 0.8627 against the euro. Next near term resistance for the pound is likely seen around the 0.84 level.
Data from Eurostat showed that Eurozone retail sales grew for the second straight month in March, but the pace of growth weakened from February.
Retail sales rose 2.7 percent in March from February, when volume was up 4.2 percent. However, the pace of growth exceeded the economists' forecast of 1.5 percent.