Sterling hit a two-month low against a rising dollar on Thursday, with the British currency seeing further pressure after data showed UK house prices fell this month, while comments from a Bank of England official highlighted risks to growth.
Sterling buckled as the dollar was boosted against the euro on an above-consensus US weekly jobs report.
"I think the market is now moving a lot more in reaction to the dollar, rather than this morning's data. The data and comments from the BoE were supporting downward momentum in cable earlier," Barclays Capital foreign exchange analyst Adarsh Sinha said.
Sterling hit a two-month low of $1.7593, but retraced slightly by 1453 GMT to $1.7617, down 0.36 percent on the day.
Sterling hit a three-week low of 68.35 pence, before tracking back to 68.18, down 0.16 percent on the day.
British house price inflation fell to its weakest in 9 years this month, a survey from the Nationwide building society showed on Thursday, but mortgage approvals surged in August after the Bank of England cut interest rates.
Bank of England policy maker Richard Lambert said in a newspaper interview that Britain risks undershooting economic growth forecasts set by the BoE in August unless consumer spending recovers.
Analysts said below-consensus data overall this week, including GDP and retail sales, had put the pound on the back foot due to rising speculation of another BoE rate cut.
"Sterling is on the defensive and of course we have had soft data over the last 24 hours, which has exposed the currency to weakness against a backdrop of continued hawkish US Federal Reserve speak," Tullett Liberty G7 market economist Lena Komileva said.