LONDON (Reuters) – The British pound rose slightly on Thursday but remained close to its monthly low against the dollar this week as a sense of stability returned to markets after a highly volatile start to the week.

The pound was last up 0.1 percent on the day at $1.27025, but was still heading for its fourth weekly decline after falling almost 1 percent so far this week, the longest weekly losing streak in almost a year.

The euro, which hit its highest level against the pound since late April on Thursday, rose 0.1 percent to 86.15 pence.

The Bank of England’s narrow decision to cut interest rates last week has hurt the pound.

But since then, fears of a hard landing for the US economy, among other factors, have led to a wave of selling in risky assets, which, along with other global markets, has led to a downward trend in the pound.

On Thursday, however, the dollar side of the currency pair came under greater pressure.

Traders are currently pricing in a full percentage point rate cut from the Federal Reserve this year, while the BoE would only factor in around 45 basis points, which theoretically gives the pound an advantage.

The pound has lost just 0.2 percent this year, still the best performing major currency against the dollar. In comparison, the euro, which came in second, was down one percent, and the Norwegian krone, which performed the worst, was down 6.4 percent.

However, the pound may find it difficult to make further progress given the BoE’s rate-cutting tactics and what appears to be fragile risk appetite, says Chris Beauchamp, market strategist at IG.

“After giving up its gains yesterday, the price has risen again,” he said.

“While a higher low is still possible here, it will take more than a day of gains. The pound has not been able to handle this over the past month as intraday jumps have not carried over into the new session. Until this changes, sellers remain in control.”

(Reporting by Amanda Cooper; Editing by Emelia Sithole-Matarise)