The pound rebounded against its most major counterparts in the European session on Thursday, as markets pared bets of near-term rate cuts from the Bank of England following comments by Governor Andrew Bailey.

During the news conference, Bailey said that the policymakers need more evidence that inflation would fall all the way to 2 percent and stay there before lowering rates.

"We don't need to see inflation back at target to cut rates, we need evidence that it is heading there," he added.

Bailey's comments suggested that any rate cut may not happen soon.

The BoE left its benchmark rate unchanged at 5.25 percent, as expected.

The bank reiterated that monetary policy will need to remain restrictive for sufficiently long to return inflation to the 2% target sustainably in the medium term.

British factory activity deteriorated further at the start of the year amid the lower output and new orders as the Red Sea crisis badly impacted the supply chains, according to survey results from S&P Global.

The Chartered Institute of Procurement & Supply Manufacturing Purchasing Managers' Index, or PMI, rose to 47.0 in January from 46.2 in December.

The flash score was 47.3. Any reading below 50 indicates contraction in the sector.

The pound recovered to 1.2715 against the greenback and 1.0949 against the franc, from its early fresh 2-week lows of 1.2625 and 1.0894, respectively. The currency is seen facing resistance around 1.31 against the greenback and 1.15 against the franc.

The pound bounced back to 0.8528 against the euro, up from a previous 2-day low of 0.8558. This may be compared to a prior 2-day high of 0.8520. Next key resistance for the currency may be located around the 0.84 level.

In contrast, the pound fell to more than a 2-week low of 186.22 against the yen. If the currency falls further, it is likely to test support around the 179.00 level.

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