Ahead of a knife-edge Bank of England interest rate decision on Thursday, sterling has been pushed and pulled this month by speculation over whether an imminent rate cut is likely.
But with Britain formally set to leave the European Union on Friday, concerns about future ties were also coming back into focus, analysts said.
The European Union will "never, never, never" compromise on the integrity of its single market, its chief Brexit negotiator warned Britain on Monday, saying London must now face reality after underestimating the costs of leaving.
"It's been a case that Brexit issues have been off the agenda for a while, but there are now some signs of friction between the two sides as negotiations are gearing up, and that might be a source of consternation," said Jeremy Stretch, head of G10 currency strategy at CIBC Capital Markets in London.
He also noted an article by the Times newspaper reporting that Brussels believes European Union judges should have the power to rule on any post-Brexit agreement with the UK as a potential explanation for early sterling weakness.
Sterling was last down 0.35% at $1.3007, a one-week low.
The British currency was a third of a percent weaker against the euro at 84.66 pence, its lowest level in almost a week.
Market positioning data released on Friday by the U.S. Commodity Futures Trading Commission suggests that, though speculators have slightly reduced net longs in sterling, they hold a substantially large long position.
Those long positions are likely to remain under pressure this week before the central bank decision in a broader market that is wary of adding to risky positions.
Other major currencies were broadly stable with the dollar hovering at an eight-week high as investors focused on the economic fallout from the new coronavirus that has killed 106 people in China.