Investors are bracing for Friday's U.S. employment report, which economists expect to show that 223,000 jobs were created in July. On Thursday, U.S. jobless claims rose from the previous week, but the trend us clearly positive.  "The key difference between last week and this week is that we are one week closer to the Fed's rate hike," said Stephen Jen, a partner at SLJ Macro Partners in London.  "The economic data doesn't need to accelerate for the Fed to pull the trigger; the Fed only needs to see the recent trends extending for another few weeks."  Market participants were also focused on the BoE message.  The Bank of England pointed to a possible increase in interest rates early next year, after only one of its top policymakers backed an immediate move and the bank forecast any pickup in inflation from zero would be slow due to a strong pound.  Read MoreMillion-dollar home prices soften  The pound fell against the dollar and euro. Sterling fell 0.6 percent to $1.5508, while the euro rose 0.6 percent versus the pound to 70.36 pence.  The dollar, on the other hand, was slightly lower versus the yen, at 124.67 yen, while the euro was up marginally against the greenback at $1.0926.  The dollar index was down 0.17 percent at 97.80.  The Swiss franc, meanwhile, hit its lowest against the euro since March 10 after a survey showed consumer sentiment fell in July to its lowest since autumn 2011.  In mid-morning trading, the euro rose 0.4 percent to 1.0712 francs, while the dollar gained 0.3 percent to 0.9816 franc.
The dollar edged lower against major currencies in choppy trading on Thursday, as investors balanced their positions ahead of Friday's data.