It was the latest in a run of mediocre economic data and further reduced the chances of a rate increase from the Bank of England when it meets next week.

"We are starting to see any residual expectations of a rate hike from the Bank of England next week starting to fade," said Viraj Patel, an FX strategist at ING in London.

Swap markets now indicate a less than 20 percent chance of a rate increase next month, down from 90 percent in early April.

Struggling against a resurgent dollar, the British currency fell 0.6 percent to $1.3683. It is down nearly 5 percent from a post-Brexit referendum high of $1.4377 hit on April 17.

Britain's FTSE 100 hit a session high after the data sent the pound sharply down. The leading index of international companies, which benefit from a weaker sterling, was last up 0.28 percent.

British gilt futures rose modestly by around 7 ticks to turn positive and were last up around 3 ticks on the day.

Data from the US Commodity Futures Trading Commission showed net long speculative positions, which had started April at their highest level in four years, posting their second-biggest weekly drop of the last eight months.

Against the euro, sterling weakened 0.26 percent to 87.94 pence.