Sterling fell to its lowest level in two months against the euro on Friday as weak British data raised prospects the Bank of England will cut the cost of borrowing sooner rather than later, after leaving it steady on Thursday.
The pound also fell one percent against the dollar, retracing the previous day's gains after the number of job losses in the US last month following hurricanes Katrina and Rita were less than economists had expected.
British economic growth slowed to its weakest rate in four months in the third quarter of 2005 as industrial output waned, the National Institute of Economic and Social Research said on Friday.
The GDP data followed industrial output figures on Thursday that unexpectedly fell at their sharpest pace in five months in August.
"We've had a run of better data from Europe and a run of softer data from the UK and that seems to be driving euro/sterling," Calyon senior currency strategist Daragh Maher said.
Sterling fell to 68.83 pence - its lowest since August 12, remaining close to that level by 1402 GMT.
The pound was at $1.7601, down 1.08 percent on the day against the dollar, giving back the previous session's gains to a one-week high.
Analysts said pressure on cable built more after the US employment data. A total of 35,000 non-farm payroll jobs were shed in September, much less than the 143,000 expected by economists. July and August job creation was revised up a combined 77,000 too.