Sterling leapt more than one percent against the dollar to two-week highs on Friday on weaker than expected US employment data, but under-performed the euro on doubts about the pace of future UK rate increases.
US employers added 32,000 workers to payrolls in July, far weaker than the 228,000 forecast, and previous non-farm payroll releases for May and June were revised down.
The data raised question marks over how quickly the US will up interest rates, though most analysts still see a quarter-point rise to 1.5 percent next week.
The UK hiked rates by a quarter point this week to 4.75 percent, but dovish comments from the Bank of England and mixed UK data have also encouraged investors to reduce expectations for future UK rises.
"Sterling is down against the euro because the news out of the US has caused markets in countries with a tightening bias to scale back a little bit," said Trevor Dinmore, foreign exchange strategist at Deutsche Bank.
Sterling rose as far as $1.8464, its best showing since July 22 and a jump of more than two cents from just before the data release.
But the pound dropped to two-week lows of 66.50 pence against the euro, a fall of 0.50 percent from the US close.
Sterling also hit one-week lows against its trade-weighted index, which is closely watched by the Bank of England and has a strong euro component.
A heavy UK data week next week should provide more clues on the British rate-tightening cycle, analysts said, after five quarter-point rises since last November.
Data releases include June trade and July CPI inflation on Tuesday, and labour market statistics on Wednesday.
But analysts said the key release was the Bank of England's quarterly inflation report, also on Wednesday, which will give the central bank's latest inflation projections.
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