Sterling traded flat on Thursday in a quiet market after falling initially following a survey that showed consumer sentiment had fallen to a four-year low and news that Britain's deputy prime minister had been forced to resign.
The pound had edged lower following the resignation but data showing British public finances had strengthened in November helped the pound recover. British Prime Minister Theresa May forced Damian Green to resign after an internal investigation found he had made misleading comments about pornography on computers in his office.
The resignation of one of May's most trusted allies is a blow as she navigates the final year of tortuous negotiations towards Britain's exit from the European Union in March 2019. The next phase of the talks has weighed on the pound in recent days, and kept in check gains made after Britain and the EU agreed to move to the second phase of talks.
Traders said volumes were low ahead of the holiday season and in the absence of major economic news or Brexit developments, the pound was stuck in a trading range.
"We see some marginal weakness on the back of the resignation," said Naeem Aslam, chief market analyst at Think Markets. "But we are not seeing any volumes from traders. It's very quiet. We are pretty much consolidating around the 1.33 to 134.5 levels."
The pound was flat against the dollar at 1.338 after earlier slipping 0.1 percent. Against the euro the pound recovered and was flat at 0.88. The GfK consumer confidence index showed British consumer sentiment at its lowest level since December 2013 as inflation-squeezed households took a gloomier view of their finances.
Britain's economy has slowed this year, and IMF managing director Christine Lagarde said on Wednesday the economy was only likely to grow by 1.5 percent next year.
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