Sterling hit a three-month high against the dollar on Friday thanks to expectations of a US rate cut this month, but fell low versus the euro as investors reckoned Britain would be next to start cutting rates.
The National Institute of Economic and Social Research (NIESR) cut its forecast for UK growth to 2.2 percent from 2.6 percent in a quarterly report published on Friday. Separately, data from the Land Registry showed annual UK house price inflation slowed 8.7 percent last month from 9.4 percent in August.
Sings of a slowdown in the UK housing market and the broader economy have prompted economists to forecast growth-boosting rate cuts from the Bank of England, with some saying the first move could come as soon as next month.
The euro rose as high as 70.13 pence, its highest level since late September. It also hit an all-time peak versus a broadly weak US dollar at $1.4388 ahead of a widely expected Federal Reserve rate cut on October 31. The pound was steady at $2.0506 by 1356 GMT, having retreated from earlier three-month highs of $2.0574.