Sterling is no longer in crisis, but currency traders are reluctant to position for a prolonged rebound as the Bank of England’s commitment to rapid interest rate rises wanes in the face of a looming recession.

The pound’s recovery from its September plunge to an all-time low against the US dollar has stalled in the past week. While the doubts about the UK’s economic and political credibility that drove the pound below $1.04 have receded, investors have stuck with sizeable bets against a currency hamstrung by a toxic mix of high inflation, a massive trade deficit, and a bleak outlook for the UK economy.

Having climbed above $1.16 in late October, helped by new prime minister Rishi Sunak ditching the tax-cutting and borrowing policies of predecessor Liz Truss that sparked September’s meltdown, sterling finished the week around $1.13. A slide this week, which was dulled on Friday when the dollar fell broadly against other currencies, came despite the BoE’s 0.75 percentage point rate increase, the biggest in 30 years.