Traders brushed off figures showing a jump in British house prices and rising consumer confidence, while traders said sterling/dollar stop-loss orders aggravated the pound's downward move to a session low of $1.6036. "The fact that the $1.61 level, which was seen as key support for the last few weeks, has been broken on US data is clearly a negative signal for sterling," said Jane Foley, director of currency research at Forex.com in London.
By 1501 GMT, sterling traded at $1.6050, nearly half a percent lower on the day and well off the day's high of $1.6180. It slipped versus the euro, which rose 0.2 percent to the day's high of 86.92 pence and recovered from a slide to 86.03 on Thursday, a level not seen since August.
The euro earned a slight reprieve against sterling after a European Union official on Friday said there was no chance of a Greek default or an EU bailout as the country works to control its burgeoning debts. Jitters about how Greece will service its ballooning debts have stung the euro, which is on track to fall 2.0 percent against the pound this month.
Greek/German 10-year bond spreads narrowed to around 380 basis points on Friday, a day after yawning to 405 basis points, but traders said that any more blow outs would trigger euro selling, which would benefit the pound.