וְהוּא רַחוּם יְכַפֵּר עָוֹן וְלֹא יַשְׁחִית וְהִרְבָּה לְהָשִׁיב אַפּוֹ וְלֹא יָעִיר כָּל חֲמָתוֹ
But He, being full of compassion, forgives sin and does not destroy; He continuously turns away His anger and does not stir up all His wrath.
Continuing pesukei d’zimra, the morning verses of praise.
This Psalm describes the historic tendency of Israel to rebel. G-d worked miracles in Egypt, split the sea, fed the people manna, yet still they rebelled. When He would punish the nation, they would repent, only to backslide. Then comes this verse, which tells us how G-d is compassionate and therefore refrains from destroying us. The Metzudas David explains that this verse refers to the long list of transgressions enumerated in the Psalm. Even though we sin against G-d constantly, He repeatedly forgives us, never unleashing the wrath we may deserve.