The pound is falling again

The pound's rally is already running out of steam after just one day.

Sterling gained on the dollar and euro on Tuesday thanks to a weak dollar and the return of inflation prompting traders to bet against a November interest rate cut from the Bank of England.

But the pound is falling against both the dollar and euro again on Wednesday morning, reverting to type over the last fortnight.

Here is how the sterling-dollar pairing looks at just after 7.10 a.m. BST (2.10 a.m. ET):

And here is the sterling-euro pairing at the same time:While neither are particularly drastic drops, it shows just how weak sentiment towards sterling is at the moment. Traders are not confident enough about the state of Britain to extend the rally to a second day, with the spectre of Brexit constantly looming over the markets.

Michael Hewson, chief market analyst at CMC Markets, says in an email on Wednesday morning: "Yesterday's move through the 1.2300 area could have the potential to see further gains towards the previous peaks just below 1.2500.

"A move back below 1.2260 could well undermine that scenario and argue for a move back towards the recent lows at 1.2100."

We are in a precarious position.