Sterling fell to its lowest since mid-November against the euro and rose against a weakening dollar after data showed the British economy contracted slightly more than expected.
Economic output in the UK fell by 0.3 per cent during the July-September quarter, compared with a previous estimate of 0.2 per cent.
Analysts see mainly downside risks for the pound from now to year-end as the British economy remains stuck in a stagflationary environment while the data calendar is light.
Sterling fell 0.2 per cent to 87.99 pence per euro, its lowest level since November 15th.
It had risen 0.1 per cent to $1.2095 after hitting its lowest level since December 1st at $1.2056 on Wednesday.
The European Central Bank pledged last week to raise rates at a stable pace to fight inflation, while the Bank of England is supposed to be closer than the ECB to the end of its tightening cycle.
Higher rates tend to support currencies, but some analysts fear that BoE's excessive monetary tightening might hurt the British economy and weaken the pound.
Central banks have to balance the need to fight inflation against risks of further deepening an economic slowdown.
Politics will also be in focus as a resolution with the EU over the Northern Ireland protocol could help define the relationship between the UK and the EU over the coming years.
More than three-quarters of British companies have reported that the trade agreement between the European Union and Britain has made it difficult for them to grow their business.
Sunak said last week he was hopeful of reaching a resolution to a long-running dispute with the European Union on changing post-Brexit trade rules for Northern Ireland.
