Sterling edged lower on Friday and is poised to register its third consecutive weekly loss as concerns about the progress of Brexit negotiations trumped any optimism ahead of a likely interest rate hike next week.
European Union Brexit negotiator Michel Barnier rejected key elements of Britain's new trade proposals on Thursday even as he and his new British counterpart Dominic Raab voiced a shared determination to reach a deal by October.
Negative headlines on the Brexit front and a rebound in the dollar prompted the British currency to register its biggest daily loss in 1-1/2 weeks.
On Friday, the pound was consolidating losses at a three-day low of $1.3117.
Market bets for a Bank of England rate hike next week have settled at a firm 81 percent. In contrast, the European Central Bank backed investor expectations for a 10 basis point hike in October 2019, its first since 2011.
Against the euro, sterling was steady at 88.84 pence.
However, overall market moves in foreign exchange markets were tiny as investors waited for second quarter GDP data that are expected to reaffirm a strong showing by the U.S. economy.