Pound sterling falls back despite Bank of England's hike to UK growth forecasts

Mark Carney said “the Brexit journey is really just beginning”, with “twists and turns” to come.

Having hit a fresh seven-week high earlier in the session, the pound was recently trading at around £1.253 (Getty)

Sterling gave up early gains on Thursday after the Bank of England dramatically raised its growth forecast for the year but cautioned that households will experience a substantial squeeze on income as a result of inflation.

Having hit a fresh seven-week high earlier in the day, the pound was down around 0.9 percent on the day, around $1.2539, in late trading in London.

"Carney kicked the can along the road this afternoon,” Alex Lydal, Foenix Partners' head of dealing, told Reuters. He added that Mr Carney had worried markets by failing to reveal more about how inflation will be handled going forward.

Luzdary Hammad, research analyst at FXTM, said sterling’s steep losses continues to highlight how the “Brexit dilemma” has kept investors from betting on the currency.

“Markets were expecting the BoE to tilt to the hawkish camp amid the accelerating inflation, but the central bank seemed to be in no rush to take action and [as] such [it] has left sterling bullish investors empty handed.”

“Uncertainty still remains the name of the game when dealing with the pound,” he said. He added that the pound is likely to fall further ahead of Article 50 being triggered.

Speaking to journalists at a news conference after the BoE left interest rates on hold, Bank of England Governor Mark Carney said stronger growth projects do not mean the referendum is without consequences.

He said: “Uncertainty over future arrangements is weighing on business investment.”

"The Brexit journey is really just beginning", with "twists and turns" to come.