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... meaning it can stay supportive near-term.
The British Pound has been quietly outperforming and is tipped to "hold its own" near current levels.
"After all the gyrations in bond markets last week and predictions that the UK would need an IMF bailout, conditions have settled down," says Chris Turner, head FX strategist at ING Bank N.V.
"Sterling's high-yield status makes it an expensive sell," he adds.
The Pound to Euro exchange rate (GBP/EUR) dropped half a per cent last Tuesday amidst a global bond selloff that was particularly acute in the UK, where concerns over the country's government debt are growing.
However, fiscal fears have subsided again and recent auctions of government debt "seem to have been going well" notes Turner, "showing that the UK has no problem servicing its debt if the price is right."
A subsequent recovery by sterling sees GBP/EUR recover Tuesday's losses, reaching 1.1564 by Thursday.
ING predicts EUR/GBP will remain well contained in a 0.86-0.87 range, which is 1.15-1.1630 for GBP/EUR. Those with payment requirements could set automatic orders around these levels to rationalise their payment strategy and eliminate some of the uncertainty.
Analysts at Standard Chartered also think the pound can continue to enjoy support thanks to the UK's high interest rates, which traditionally suit the pound when volatility in financial markets is low.
"Sterling is not without challenges, but near-term resilience is underpinned by relative rate support," say analysts at RBC Capital Markets, in their most recent global currency report.
That interest rate support should remain intact as the Bank of England will find it increasingly difficult to cut interest rates much further owing to elevated domestic inflation rates.
With the current wave of inflation still yet to peak, analysts warn that cutting rates risks stirring further inflationary forces. This should keep UK bond yields supported relative to elsewhere, meaning foreign investor capital will be attracted to UK assets.
"Sterling's high-yield status makes it an expensive sell," says Turner, "unless there is some imminent bad news expected, sterling can hold its own at these levels."
It's been a quiet couple of weeks on the domestic front, but that changes next week with the release of domestic data releases and the Bank of England's interest rate decision.
"The focus is likely to shift to the GBP," says a note from Standard Chartered. "Recently, weak labour market data has once again revived expectations of significant BoE rate cuts. However, BoE minutes demonstrated that inflation is still present, and cutting rates will not be a simple decision for the BoE."
The Bank's previous interest rate decision surprised markets as there are signs of growing disent on a previously unanimous assumption that rates should be cut on a quarterly basis.
In fact, key members of the Bank's Monetary Policy Committee voted to keep interest rates unchanged, showing it will be increasingly difficult to reach consensus on further reductions.
This can help the pound, says Standard Chartered:
"The magnitude of rate cuts may disappoint markets and result in more support for the GBP relative to the EUR in the near term."
ING says next week's Bank of England rate meeting should keep sterling supported. However, upcoming jobs and CPI inflation releases could surprise on the downside, warns ING, which could undermine the pound.
Nevertheless, "we're still happy with our calls that EUR/GBP ends the year near 0.87 and GBP/USD near 1.38 as the dollar bear trend dominates," says Turner.
EUR/GBP at 0.87 gives a GBP/EUR at 1.15.
Longer term, however, RBC Capital Markets says it remains cautious on sterling’s prospects, citing structural economic weaknesses.
"Near-term resilience does not change our longer-term view that structural imbalances will weigh on GBP," RBC says.
The November 26 budget is expected to be the next flashpoint for the currency. Expectations for more stinging tax rises could slow economic activity, which would bring the sustainability of UK debt back into focus.