Sterling steadied against the dollar and edged up on the euro, despite official data showing Britain's economy grew more slowly than previously thought before the Omicron variant surge seen in recent weeks.
Official data on Wednesday showed gross domestic product grew by 1.1% in the third quarter between July and September, weaker than a preliminary estimate of growth of 1.3%.
The pace was also off the economy's 5.4% bounce-back in the second quarter when many coronavirus
restrictions were lifted.
Investors are braced for a further slowdown due to a rise in COVID
-19 cases that has hurt hospitality, leisure and retail businesses, while the government has said it can't rule out further restrictions after Christmas.
Sterling was broadly flat against the dollar at $1.32650.
The pound has lost some of its momentum since jumping close to $1.34 on the Bank of England's interest rate hike last week, making Britain the first G7 country to raise rates since the start of the pandemic.
"We continue to believe that the UK rate market appears well priced at the current juncture for up to four BoE hikes next year," currency analysts at MUFG said in a note.
"It provides a high hurdle for the pound to strengthen on the back of a hawkish repricing of BoE expectations in the near-term, especially as the worst of the new Omicron COVID
wave is yet to be seen."
Currency markets overall were muted on Wednesday, as volatility subsided in thin trading ahead of the holidays and after a flurry of central bank moves last week.
Against the euro, sterling was up 0.1% to 84.95 pence per euro.