LONDON - The pound was steady on Friday after Thursday's drop on the back of senior aides of Prime Minister Boris Johnson saying they would hold a parliamentary election in the days after Brexit if lawmakers sink the government with a no-confidence vote.
Analysts say the election talk will weigh on the pound on Friday because it is growing increasingly likely that Johnson will face a vote of no confidence soon after Sept. 3, when parliament returns from its summer recess.
Sterling was flat at $1.2126, after falling to as low as $1.2095 the day before as it flirted with a 31-month low of $1.2080 reached last week.
Against the euro, the pound was 0.2% stronger at 92.31 pence, paring back the losses it made on Thursday when it fell to a new two-year low of 92.65 pence.
Traders are awaiting British gross domestic product data, due at 0830 GMT. Economists polled by Reuters expect the June GDP to rise by 0.1% month-on-month, compared with a 0.3% increase in May, which analysts say could send the pound lower.
"The downside risk for the pound is for a contraction in growth, which would likely spur headlines about a possible recession," said Derek Halpenny, head of research at MUFG.