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According to Reuters, sterling was down due to worries about whether Ireland could repay its debt.
By 08:55 GMT, the pound had shed 0.4 per cent at $1.6055, while it was hovering under the $1.6300 figure - the highest since January - which it hit last week.
Lloyds TSB analysts pointed out in a note that sterling may be in line to bounce back next week if US yields are down on quantitative easing (QE).
They added: "With no obvious triggers for sentiment to turn more negative on the pound, the current firm tone may continue for a while."
This comes after the pound had gains of more than half a per cent against the dollar by midday on Wednesday due to the possibility of QE being reduced by the BoE, the news provider stated.
Posted by Chris Weaver
