The dollar on Thursday lost ground against a basket of currencies as traders booked gains following a solid November and on caution ahead of Friday's government payrolls report.
The greenback weakened against sterling on a perceived crack in Britain's "hard Brexit" line on leaving the European Union after Brexit minister David Davis said Britain would consider paying into the EU budget for market access. The pound at one point was up about 2 cents or 1.6 percent to a three-week high against the dollar at $1.2696.
"The U.S. dollar is trading heavily against most of the major currencies, but the general tone appears consolidative in nature," said Marc Chandler, global head of currency strategy at Brown Brothers Harriman in a research note.
The against a basket of six major currencies fell 0.3 percent to 101.22. It reached a 13-1/2-year peak of 102.05 last week and gained about 3 percent for a second month in November.
The greenback pulled back from an earlier 9-month peak against the and was flat on the day at 114.41 yen.
The dollar's wobbly start in December was stemmed by higher U.S. Treasury yields following upbeat data on manufacturing and construction spending. Investors are waiting to see whether the government's jobs report for November due at 8:30 a.m. (1330 GMT) on Friday would support the view of faster U.S. economic growth in the coming year, which could stoke further gains for the dollar.
The strengthened against the dollar and yen after Reuters reported, citing senior sources with direct knowledge of discussions, the European Central Bank will extend its bond purchases beyond next March and consider sending a formal signal at its policy meeting next week the asset purchase program will eventually end.
The single currency was up 0.4 percent at $1.0631 and 0.5 percent higher at 121.63 yen.