The pound erased some of its early gains against its most major counterparts in the European session on Thursday, as policymakers of the Bank of England unanimously left the key interest rate and asset purchase program unchanged, as expected.
The nine-member Monetary Policy Committee held its key interest rate unchanged at 0.75 percent in line with economists' expectations.
The stock of corporate bond purchases was kept at GBP 10 billion and that of government bond purchases at GBP 435 billion.
The central bank reiterated that if the economy were to develop as projected in November and there is smooth adjustment to the possible Brexit outcomes, a margin of excess demand was expected to emerge.
"In that context, an ongoing tightening of monetary policy over the forecast period, at a gradual pace and to a limited extent, would be appropriate to return inflation sustainably to the 2 percent target at a conventional horizon," the bank said.
Data from the Office for National Statistics showed that U.K. retail sales rose for the first time in three months in November to surpass economists' expectations.
The volume of retail sales including automotive fuel rose 1.4 percent from October, which was much faster than the 0.3 percent growth economists had predicted.
The currency traded mixed against its key counterparts in the Asian session. While it rose against the greenback and the franc, it held steady against the euro. Against the yen, it dropped.
The pound eased back to 141.61 against the yen, not far from a 10-day low of 141.41 seen at 1:00 am ET. Next key support for the pound is seen around the 140.00 mark.
The Bank of Japan left its ultra-loose monetary policy unchanged, asserting its pledge to keep interest rate extremely low for an extended period of time amid indications of global economic slowdown.
The board maintained interest rate at -0.1 percent on current accounts that financial institutions maintain at the bank.
The pound was trading weaker at 1.2535 against the franc, down from a high of 1.2577 hit at 2:00 am ET. The pound is seen finding support around the 1.23 level.
Having advanced to a 10-day high of 1.2707 against the greenback at 6:15 am ET, the pound pulled back slightly with the pair trading at 1.2669. The pound is likely to find support around the 1.25 level.
The pound held steady against the euro, following an 8-day low of 0.9050 touched at 4:45 am ET. The pair was valued at 0.9020 when it ended Wednesday's trading.
Looking ahead, Canada wholesale sales for October, U.S. leading index for November and weekly jobless claims for the week ended December 15 will be out in the New York session.
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