The Bank of England (BoE) left interest rates and its asset purchase target unchanged on Thursday, amid expectations from some analysts that sterling could be set for a fall.
As expected, the bank decided to hold off on adding to the £375 billion ($628 billion) of asset purchases it has unleashed over previous years and kept its main benchmark rate at a record low of 0.5 percent. Sterling remained relatively unchanged after initially rallying after better-than-expected house price data during the morning session. David Bloom, HSBC's global head of foreign exchange strategy, believes that many strategists are "completely wrong" in believing the currency could push higher from these levels.
An appreciation of the British pound appeared to stall in May and the currency likely to trend lower in the near term, according to some strategists. Bloom added that the current account deficit in the U.K. and the lack of earnings growth meant he was bearish on the currency.
From a low of around $1.4865 last July, sterling climbed 14 percent to hit a high of $1.6976 in early May - a level not seen since August 2009. However, after dovish words from BoE Governor Mark Carney the currency has come under pressure and is expected to fall Thursday and Friday with a host of other economic events crowding out the BoE's rate decision.