Sterling weakened after the Monetary Policy Committee surprised economists who were expecting a 'hawkish hold' on policy, by cutting its forecasts for near-term growth in the UK economy and for inflation.
On Thursday, rate-setters at the Old Lady of Threadneedle Street kept Bank Rate on hold at 0.50% and the size of the Bank's asset purchase programme at £435bn, both as had been widely expected.
However, they cut their forecast for the rate of growth in the UK's gross domestic product in 2018 from 1.8% to 1.4%.
In parallel, the inflation projection for the current year was marked down from 2.7% to 2.4%, although rate-setters were at pains to stress that the chief reason for the downwards revision to their CPI projection was a lower estimate of the impact from weakness in Sterling.
After an initial scant reaction, the pound finally succumbed to selling, retreating to an intra-day low of 1.3460, before recovering to close at 1.35202, off by just 0.2% on the day.
To take note of perhaps, some analysts expressed "puzzlement" at the MPC decision's to cut their GDP forecast even while at the same time insisting that weak growth in the first quarter of the year was largely expected to be revised away.
As well, while the MPC continued to tow the line of three interest rate hikes over the forecast period, consumer prices were now projected to be nearly back down to target in two years' time.
Indeed, during the MPC's press conference, Ben Broadbent, the Bank of England's Deputy Governor for Monetary Policy, appeared to be adamant that the underlying message to markets had not changed.
But markets appeared to be in an unforgiving mood, given what many observers understood had been an abrupt (and very recent) 'about face' in the Bank's 'forward guidance'. In fact, some analysts (but by no means a majority) cautioned the MPC might move back towards a somewhat more hawkish stance just as quickly if backed-up by the incoming data.
The pound was even weaker against the euro, losing 0.81% to 1.1337, as euro/dollar bounced against the Greenback - after having moved below its 200-day moving average on that cross the day before - on the back of weaker than expected CPI data out in the States on Thursday.
Against the Japanese yen, the pound was down by 0.53% to 147.8840.
Commenting on the MPC's decision, Fabrice Montagne and Sreekala Kochugovindan at Barclays Research told clients: "While a confident BoE in normal times would likely have happily looked through a growth soft patch and hiked, increasing doubts regarding the outlook amid high levels of uncertainty led the MPC to forgo a rate hike in May and reshape the timing of its tightening cycle.
"We think the bar for a hike in August is now as high as 0.5% q/q growth in Q2 as well as uninterrupted improvements in the labour market. We believe that such a scenario will not materialise and that weakening underlying growth will deter the bank from hiking at all in 2018 and 2019."
Sterling was also weaker by 0.15% against the Argentinian currency, dipping 0.15% to 30.6875, amid swirling 'market chatter' that officials in Buenos Aires were in talks with the International Monetary Fund.
The US dollar
on the other hand was 0.03% higher against the Argentine peso and changing hands at 22.7005.
In the background, the US dollar spot index was off by 0.42% to 92.6470, but just off its best levels since the end of 2017.