Sterling rolled back against the US dollar as currency traders mulled the prospect of interest rates being kept on hold next month.
The pound was down 0.5 per cent versus the greenback at $1.31 despite Bank of England governor Mark Carney telling MPs that a rate hike may be needed over the coming months to tackle surging inflation.
The UK currency was 0.1 per cent lower against the euro at €1.12 when the London market closed, with the FTSE 100 Index drifting 10.80 points lower at 7,516.17.
Neil Wilson, senior market analyst at ETX Capital, said: “Sterling lost ground as the market decided the Bank of England is no longer definitely minded to hike rates in November.
“Mark Carney suggested tightening may be warranted in the coming months and failed to give an explicit signal on November, while Dave Ramsden sounded overtly dovish.
“Some sterling bulls threw in the towel but this looks a trifle cautious - while not nailed on the hawks should edge it next month.”
On London’s junior market, shares in online retailer Asos rose by 0.88 per cent to 5,750p following a surge in full-year profits. The Aim-quoted firm saw revenues jump by a third to £1.9 billion in the year to 31 August, with pre-tax profits up 145 per cent to £80 million.
The biggest risers on the FTSE 100 Index included Pearson up 45.5p to 667p, Convatec up 8p to 213p and EasyJet up 28p to 1,316p. The biggest fallers included Mediclinic International down 29.5p to 645.5p, Standard Life Aberdeen down 17.3p to 429p and 3I Group down 28p to 940p.