Sterling held broadly steady against the dollar but slipped against the euro on Friday after long-awaited US jobs data came in strong but not strong enough to give the greenback the power to drive higher.
In a session marked first by flat calm then high turbulence, sterling's net position was broadly unchanged after it tracked the euro down, up, then back to neutral against the US currency.
US non-farm payrolls matched forecasts, boosting already high expectations that the Federal Reserve will raise rates from a 46-year low of 1.0 percent when it meets at the end of June.
For sterling, expectations are also high that the Bank of England will widen the US-UK rate differential for a few brief weeks when it announces its rate decision next Thursday, a prospect which should keep the pound well supported until then.
"As long as the market remains convinced that we will continue to see sterling interest rate hikes going through to the end of the year, then the rate differential side is something which works in sterling's favour," said David Mann, currency strategist at Standard Chartered in London.
"But it will also be a function of the overall dollar picture."
By 1500 GMT the pound was slightly softer on the day at $1.8368, around a cent off this week's two-month high.
It was 0.4 percent weaker against the euro, which was itself up 0.2 percent on the dollar. The pound was trading at 66.61 pence per euro having failed to break past a one-month high of 66.23 set on Thursday.
On a trade-weighted basis, the pound was steady at 106.00.
A Reuters poll published on Thursday showed 27 out of 45 economists polled expected the BoE to raise rates by 25 basis points to 4.5 percent next week.
While data this week showed three rate rises since early November have done little to curb a UK housing boom and high consumer borrowing, currency strategists caution that the strength of the pound on a traded weighted basis and recent high oil prices could stay policymakers' hands for one month more.
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