Sterling declined in European trade on Thursday away from 13-month highs against dollar on active profit-taking ahead of Bank of England's monetary policy meeting this month.
The greenback jumped to one-week highs after US Treasury Secretary Janet Yellen warned from the default risks due to the Congress' reluctance to raise the national debt levels.
GBP/USD fell 0.4% to 1.2573, with a session-high at 1.2641, after rising 0.1% yesterday, the second profit in a row, hitting 13-month highs at 1.2680.
Bank of England
Bank of England is widely expected to raise interest rates by 25 basis points to 4.5% today, the highest level since October 2008.
Investors are waiting for more clues to gauge the path ahead of UK monetary policies as inflation remains near record highs.
The Dollar
The dollar index rose 0.5% on Thursday, hitting one-week highs at 101.88 against a basket of major rivals.
Such gains comes amid warnings by Janet Yellen about a financial disaster if Congress refused to raise the national debt limit.