The pound bounced from a three-month low on the euro on Thursday and gained on the dollar, absorbing data showing a drop in British retail sales in July on the view this did not greatly alter the economic outlook.
With the market looking for signs that rising British interest rates are nearing their peak, the pound was sold ahead of the retail data as investors positioned for a small drop from the June rate, the first in over a year.
In the event, July sales fell 0.4 percent, more than the 0.2 percent forecast but this has to be seen in the context of June's strong gain of 1.0 percent.
On the year, sales were up a robust 6.6 percent and the three-month rate held at 1.8 percent.
"To be fair, the numbers were pretty much in line with what markets were looking for," said David Page, economist at Investec in London.
By 1440 GMT the pound had gained 0.5 percent on the day, aided by broad-based dollar slippage, to $1.8310 having dipped 0.2 US cents to $1.8199 in the immediate aftermath of the data.
Against the euro it recovered to 67.45 pence, up around 0.22 percent on the day, after forging a three-month low at 67.83 ahead of the sales data.
Its trade weighted index, which earlier hit a fresh three-month low of 104.2, climbed to 104.5 in late European trade. The index has a euro weighting of 64.82 percent, a dollar weighting of 16.49 percent and a yen one of 7.0 percent.