Sterling slipped to a two-week low against the dollar and Euro as investors questioned whether the Bank of England would raise interest rates in May following weaker-than-expected economic data and cautious comments from governor Mark Carney.
The pound has been one of the best performing major currencies in 2018 and last week surged to its highest level since the Brexit referendum in June 2016.
But weaker-than-expected wage growth and inflation, and comments by Carney that the data was “mixed” hit the currency hard, sending it down almost 1.7 percent for the week as investors rushed to price in the possibility the BoE could delay raising rates until later in the year.
The dollar was holding steady near two-week highs against a basket of currencies supported by expectations for further interest rate hikes this year.
Demand for the dollar continued to be underpinned after recent comments by Federal Reserve officials indicated rates will continue to rise in 2018 as the economy remains on a steady course.
Expectations of higher interest rates tend to boost the dollar by making the currency more attractive to yield-seeking investors.
The euro plumbed two-week lows against the dollar on Friday after European Central Bank President Mario Draghi reiterated that the bank would be cautious about removing monetary stimulus.