Sterling fell sharply to eight-month lows against the euro and versus a basket of currencies on Friday on uncertainty about Britain's interest rate and political outlook.
Weak British manufacturing data cemented market expectations interest rates may be at or near their peak at 4.75 percent, following other soft indicators and dovish comments by Bank of England policymaker Kate Barker earlier in the week.
The pound was also undermined by news Prime Minister Tony Blair had a relatively minor heart operation, and that he had sought to quell speculation over his future by pledging to serve a full third term if re-elected.
"Whenever there is uncertainty about the government, or head of government, that tends to put some pressure on the currency, and today is no different," said Chris Gothard, currency strategist at Brown Brothers Harriman.
"The manufacturing survey was also a disappointment, and further evidence that the UK economy is cooling and making the prospect of further rate increases from the Bank of England more of a moot point."
Sterling fell to 69.16 pence per euro, a drop of 0.75 percent from the US close and of two percent from the week's opening levels. It recovered slightly to 69 pence by 1420 GMT.
The pound plunged one percent to $1.7930, more than two cents below five-week highs set against the broadly weaker dollar early in the week.
Sterling hit 102.6 on its trade-weighted index, an indicator closely watched by the Bank of England.
Sterling started its decline on Friday after the UK CIPS/Reuters manufacturing survey recorded an unexpected fall in September, to 52.2 from 52.8 in August.
A break lower in the trade-weighted index triggered a further sell-off, analysts said. A Reuters poll taken on Thursday showed analysts still expected one more British rate hike, to 5.0 percent, following 125 basis points of interest rate rises since last November.
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