"The US trade data is not a ringing endorsement of the strength of the US economy. But it's mostly a technical story today and people are taking advantage of the moves to square positions," said Chris Gothard, currency analyst at Brown Brothers Harriman.
At 1416 GMT, sterling rose 0.15 percent against the dollar at $1.8253, but was down 0.7 percent versus the euro at 66.89 pence, after hitting a 10-month high against the single currency on Thursday.
"I think sterling still looks vulnerable," Gothard said. Analysts said a recent string of weak UK data has raised market expectations of a rate cut but the Bank of England was unlikely to move soon to a looser monetary policy.
Bank of England Governor Mervyn King signalled earlier this week the central bank might not be sure, saying that risks to inflation were on both sides.
Next week, markets will look on Wednesday to minutes of the BoE's June meeting, at which the Bank left rates unchanged at 4.75 percent.
The Lord Mayor of London's annual Mansion House dinner is also scheduled for Wednesday, traditionally the opportunity for the Chancellor of the Exchequer and Governor of the Bank of England to make speeches on the economy and set out policy.