The pound slipped in Asia on Tuesday on speculation of further UK policy easing, shedding 0.4 percent to $1.2981GBP after Bank of England policymaker Ian McCafferty said that more quantitative easing was likely to be required if the UK's economic decline worsens.
The dollar held its ground amid growing confidence that the U.S. Federal Reserve could raise interest rates later this year. The dollar index, which gauges the greenback against a basket of six major rivals, erased earlier slight losses and edged up 0.1 percent to 96.474, well above last week's low of 95.003, which was its lowest since late June.
The dollar was steady at 102.42 yen well above last week's low of 100.68 yen, while the euro edged down 0.1 percent to $1.1077.
Fed funds futures prices indicated that traders now see close to a 50-50 chance of a U.S. rate hike by December, compared to a 30 percent prediction as recently as last week, before the better-than-expected nonfarm payrolls report on Friday.
According to Koji Fukaya, president of FPG Securities in Tokyo, "A lot of people are taking summer vacations in Japan this week, so volume is relatively low, and there aren't many market-moving factors."
Kiwi Steady, Aussie Slips
The New Zealand kiwi was steady despite expectations that the Reserve Bank of New Zealand will cut interest rates by 25 basis points to 2.00 percent on Thursday. 24 of 25 economists polled by Reuters are expecting a rate cut. They also predict another rate cut to 1.75 percent by the fourth quarter and then hold steady, although some are predicting rates are headed even lower.
The Australian dollar erased earlier gains and slipped 0.3 percent at $0.7625.