Sterling retreated from this week's multi-month peaks versus a broadly stronger dollar on Friday, weighed down by profit-taking and by merger and acquisition related selling of the UK currency.
Associated British Foods said on Friday it has agreed to buy 51 percent of Africa's biggest sugar producer, Illovo for 317 million pounds in cash.
Currency markets have been keeping a close eye on UK M&A activity, although flows have generally been positive for sterling with news centering around foreigners snapping up British companies.
"A UK corporate (is) reportedly buying a company in South Africa, and so there has been quite a lot of sterling/ZAR (rand) selling and that's kicked off sterling weakness across the board," said Geoff Kendrick, currency strategist at Westpac
"After the Bank of England minutes earlier in the week, people got a little bit more excited about a near-term BoE hike, so .... given it's Friday as well, there is perhaps some profit taking on that," he added.
Sterling was down one percent by 1408 GMT at $1.8747, compared to Wednesday's one year peak of $1.9025.
The dollar gained ground against majors, boosted by short covering ahead of the weekend, speculation that the Federal Reserve may yet raise rates in June rather than pausing and concern that Japanese rate hikes may come later than expected.
"It just seems to be a very substantial short dollar squeeze," said Steve Barrow, currency strategist at Bear Stearns.
Versus the euro, sterling was little changed on the day at 67.88 pence, up from a session low of 67.83 pence and not far from a 5-month high at 67.52 hit earlier in the week.