Sterling hit a three-month low against the euro on Wednesday and slipped on the dollar as minutes from the Bank of England raised expectations British interest rate might be close to their peak.
The minutes showed the BoE's Monetary Policy Committee voted unanimously to raise interest rates by a quarter-point to 4.75 percent this month, as expected.
They noted there were more signs house price growth was moderating but big uncertainties remained.
This, coupled with Tuesday's soft housing survey and last week's dovish BoE inflation report, reinforced expectations the BoE was not in a hurry to raise rates again.
"The minutes confirmed the BoE's ongoing caution due to concerns about the future housing market and also the pre-emptive tightening cycle is nearing its end," said Lena Komileva, global economist at Prebon Marchall Yamane.
"Sterling was unable to make much recovery, which indicates that the exchange rate is already pricing in good news from the economy and the BoE tightening."
By 1400 GMT sterling was down a third of a percent at $1.8214, having fallen from above $1.84 on Tuesday.
It stood at 67.53 pence per euro, having hit a three-month low of 67.61 pence earlier in the session.