"Sterling dropped like a hard rock after Bank of England (BOE) Governor Carney said another rate cut is coming this summer," said Kathy Lien, managing director of foreign exchange strategy at BK Asset Management.
"Carney also warned that the BOE can react more rapidly than other institutions and the central bank will have its first full projections in August - which means we'll be looking for a move around that time," Lien added.
The pound had briefly jumped on Thursday after Boris Johnson, one of the architects of the campaign for the U.K. to exit the European Union, issued a surprise announcement that he wouldn't enter the race to become the country's next prime minister, adding another layer of political uncertainty.
Among other currency majors, the dollar rose, with the dollar index, which measures the greenback against a basket of currencies, at 95.903 as of 3:30 p.m. HK/SIN, broadly in line with levels touched in Thursday's Asia trade.
The Japanese yen weakened to 102.61 against the dollar by 3:30 p.m. HK/SIN, compared with Thursday's levels near 102.48 in the afternoon local time.
Analysts at Commonwealth Bank of Australia said in a Friday note that further easing from the Bank of Japan will be forthcoming, with the only question being its timing. "The very weak May Japanese industrial production suggests Japanese second-quarter gross domestic product (GDP) ground to a halt or may have contracted," the analysts said.
The tankan survey from the Bank of Japan showed business sentiment among Japanese manufacturers stood at plus 6, a touch better than the median market forecast of plus 4. Sentiment among big non-manufacturers fell from plus 22 to plus 19, according to the survey. Reaction to the survey in markets was muted.
Government data in Japan showed core consumer prices, which exclude fresh food prices, fell 0.4 percent in May on-year, in line with expectations. Core consumer prices in Tokyo for June dropped 0.5 percent on-year, also in line with expectations.
Haven assets continued to gain, even as investors moved back to riskier assets.
Gold prices were up 0.88 percent on Friday, hovering at $1,334.80 an ounce at 3:30 p.m. HK/SIN, near the highs of around $1,335 reached in the previous week amid volatility in markets following the Brexit vote.
Bond yields also came off record lows, but still remained down; the yield on the 10-year Japanese government bond was at negative 0.24 percent at 3:32 p.m. HK/SIN after falling as low as negative 0.251 percent, a record low.
The amount of negative-yielding global debt jumped to $11.7 trillion, a 12.5 percent increase since the end of May, according to a Fitch Ratings report Wednesday.
In China, the manufacturing sector stalled in June, with the official Purchasing Managers' Index (PMI) easing to 50.0, compared with 50.1 in May, in line with expectations from a Reuters poll. The services sector expanded at a quicker pace, with the official PMI reading at 53.7 in June, from 53.1 in May. A reading above 50 indicates an expansion.
"Today's data suggest that China is unlikely to achieve a GDP growth of 6.7 percent in the second quarter," said ANZ's Raymond Yeung and David Qu, adding economic indicators such as fixed asset investment and retail sales declined previously and Friday's PMI data suggests China's industrial production growth is unlikely to stay at 6 percent on-year in June.
"We do not think that there is a significant rise in service sector activity that can offset the downturn of the 'old economy,'" Yeung and Qu said.
Oil prices advanced during Asian hours, with global benchmark Brent higher by 0.18 percent at $49.80 a barrel, and U.S. crude up 0.14 percent at $48.39 at 3:32 p.m. HK/SIN.
In company news, shares of Sumitomo Metal Mining edged up 0.1 percent following a Reuters report that said the company entered into agreement to sell its entire 3.5 percent stake in mine operator PT Newmont Nusa Tenggara for around $350 million.
Stateside, the Dow Jones industrial average closed up 235.31 points, or 1.33 percent, at 17,929.99; the S&P 500 index was up 28.09 points, or 1.36 percent, at 2,098.86 and the Nasdaq composite was up 63.43 points, or 1.33 percent, at 4,842.67.