The downside to that is that inflation is bound to remain underpinned, which in turn suggests that the Bank will not be embarking on any further policy easing any time soon, irrespective of how bad the data gets.
US influencers
A recovery in US economic data could also have a negative effect on the pound, especially if the employment situation continues to improve. A continued improvement in this particular area could well prompt speculation of an early withdrawal of the monthly $85bn (£53.7bn) worth of bond purchases that the Federal Reserve has pledged to undertake.
With new voting members on the committee and some unease about the effectiveness of quantitative easing, the recent minutes showed that there was a significant split about the duration of the current scheme.
It remains to be seen whether the new voting members will be more dovish or hawkish with respect to this, but a continued recovery in the US is likely to put downward pressure on sterling.
The recent declines in sterling could well see the pound head back towards long-term trend line support at 1.5610 from the 2009 lows at 1.3500. The key support level lies just less than 1.5300 at 1.5270 which has been the range lows for nearly three years.
Against the euro investors could well see the single currency rise as high as 0.8600, if the 200 week moving average at 0.8540 is taken out.
Michael Hewson is senior market analyst at CMC Markets UK
