The dollar index was last up 0.1 percent at 95.531. It had earlier fallen as low as 95.340 and was on track for its worst week in a month.
Sterling fell 1 percent against the dollar, sliding below $1.30, weighed by further Brexit uncertainty after comments from UK Foreign Secretary Boris Johnson, who said Thursday that the government was in talks to leave the European Union as soon as next year.
The pound had jumped back over $1.29 on Thursday, after Bank of England policymaker Kristen Forbes said she saw no case for a further cut in interest rates, after the Bank slashed them to a record low of 0.25 percent last month.
Sterling hit a three-decade low below $1.28 in the wake of Britain's shock Brexit vote but had climbed about 5 percent as of early September as data showed the economy holding up relatively well.
That uncertainty is making it easier for investors to bet against sterling, said Vassili Serebriakov, FX strategist at Credit Agricole Corporate & Investment Bank.
"We're breaking technical levels and the overall bearishness that some of the recent headlines over the past two weeks have reinforced - concerns about the Brexit process - are making markets comfortable to stick with sterling shorts," he said.