With less than a quarter point of a rate hike priced in by the futures markets until December 2018 and no major economic data due next week, currency markets are likely to remain rangebound in the coming days.

"The sentiment in the pound remains heavy due to the Brexit risks, complex negotiations, business uncertainties and the Bank of England's dovish stance under the above-stated circumstances," said Ipek Ozkardeskaya, a senior market analyst at London Capital Group.

One-year interest rate swaps have fallen nearly 8 basis points from a one-year high hit in late June to 26 basis points on Friday, indicating dwindling rate expectations.

Sterling edged 0.1 percent lower to $1.1742 against the dollar and is set for its biggest weekly drop since June 11.

Sterling was broadly flat against the single currency at 91.32 pence per euro as risk appetite took a beating across the board.

The disarray in the White House, with US President Donald Trump's economic agenda seen under threat, hammered US stocks on Thursday and is the main driver for global equities on Friday though markets seem to have regained some of their poise.

Noise around Britain's strategy for leaving Europe and the talks on the issue with Brussels have provided little positive for investors worried that the process is becoming increasingly chaotic and may do longer-term damage to the economy.