Sterling and euro are trading within range, each under pressure from fiscal concerns

The pound relinquished early gains against the euro after the Bank of England made no mention of withdrawing extreme stimulus measures, with the pair closing near level for the day.

• As analysts had widely expected, the Bank of England kept its key interest rate on hold at a record low 0.5% and its quantitative easing asset-buying programme unchanged at £200 billion.
  
• Sterling had made some progress in the morning session, but gave these gains back following the BoE statement and as concern over Britain's precarious fiscal position continued to weigh.
  
• The prospect of low interest rates for an extended period will continue to put pressure on the pound, as policymakers are likely to wait for confirmation of economic growth in the fourth quarter of 2009, before they contemplate tightening policy.
  
• Chancellor Darling on Wednesday noted the daunting scale of spending cuts and tax rises needed to bring Britain's budget deficit into line, which means the BoE could be forced to keep monetary policy loose to compensate.
  
• With no new information for the markets, the sterling/euro pair traded sideways for the majority of the afternoon and evening session.
  
• This morning, the pound is marginally higher, but the pair are likely to remain tightly range bound throughout the day.