The pound lost ground against the dollar and the euro for a second consecutive day on Thursday (28 July), reaching a two-week low against the latter, after relinquishing the early gains it had made against the US currency earlier in the session.

Midway through the afternoon, the pound was down 0.42% against the dollar, exchanging at $1.3162, and was 0.69% lower against the euro to €1.1869, after reaching a two-week low of €1.1854 earlier in the day.

The sterling had started to make gains on the dollar overnight, after the US Federal Reserve announced late on Wednesday that it would not hike interest rates.

"Although the US central bank offered a more upbeat economic assessment, as evidenced by June's bumper non-farm payrolls employment figures, it disappointed investors looking for clues on the likely timing of the next interest rate rise," said Chris Saint, senior analyst at Hargreaves Lansdown currency service.

"Instead, the Fed appears to be leaving the door open to raising borrowing costs if upcoming data continues to surprise positively."

The Fed's decision weakened the dollar, which fell 0.27% to 93 euro cents. and 0.53% against the yen to ¥104.84, with the latter boosted by ongoing reports suggesting the Bank of Japan (BoJ) will announce a fiscal stimulus package of "more than ¥28trn" with ¥13trn in new fiscal measures at its meeting on Friday.

However, Joshua Mahony, market analyst at IG, warned investors could be set for a disappointing surprise.

"With the Bank of England and the European Central Bank both disappointing, tonight's announcement brings about a significant possibility of a hat-trick of disappointing central bank meetings," he said.

"This week's fiscal stimulus announcement will have taken the heat off the BoJ, who have thrown everything but the kitchen sink at the economy, only to find those old foes disinflation and feeble growth come back to haunt them."