The pound weakened for the fourth day against the dollar, dropping to a fresh seven-month low before the Bank of England's monetary-policy announcement later in the day.
Sterling has lost 1 percent this week, after a similar decline in the previous five days, weighed down by political turbulence in the U.K. as well as broader dollar strength. While the BOE isn't expected to adjust interest rates Thursday, markets will be looking for guidance on future policy path to see if a rate increase in August is still a possibility.
Money markets are currently pricing about a 48 percent chance of a 25-basis-point hike in August, down from 55 percent at the start of last week.
The pound fell 0.3 percent to $1.3138 after sliding earlier to $1.3125, the lowest level since mid-November. Against the euro, it slipped 0.1 percent to 87.95 pence. The yield on 10-year gilts was little changed at 1.30 percent.