Sterling managed to edge higher against the dollar and the euro today.
Traders remain cautious as Britain formally began negotiations to leave the European Union and domestic political uncertainty dented appetite for the currency.
Data released by the Commodity Futures Trading Commission on Friday showed speculators took bets against the pound to the highest since early May in the week up to last Tuesday.
This comes amid political turmoil in Britain after no party managed to win a parliamentary majority in the June 8 election.
Although sterling climbed sharply on Thursday after it emerged that the Bank of England's monetary policy committee had seen a 5-3 split on whether to raise interest rates immediately on the back of rapidly increasing domestic consumer prices, the pound did not manage to hold onto those gains.
Brexit Secretary David Davis this morning began negotiations in Brussels that will set Britain's terms for leaving the EU.
The pound has fallen over 15% since in the year since the referendum vote for Brexit, hit by worries that Brexit will damage the economy if foreign investment dries up, and that political uncertainty will dominate.
Prime Minister Theresa May, whose Conservative party lost its majority in parliament on June 8, is now trying to form a minority government with the Northern Ireland's Democratic Unionist Party.
But investors are worried that even when that deal is finalised, it will not make for a stable political environment.
Sterling inched up 0.2% today to $1.2803 and to 87.45 pence per euro, after posting a modest rise last week against both currencies.
Analysts said the fact that Brexit talks were "finally starting" should be temporarily sterling-positive and "a step in the right direction".
But they said the talks were likely to reveal either very different negotiating positions or - worse - that Britain has no clear strategy.