Oct, 7 Reuters Sterling dropped versus the euro and the dollar on Monday, with geopolitical risks and central banks39; monetary policy path still in focus.

The pound recorded its biggest daily fall last week since April after Bank of England Governor Andrew Bailey was quoted as saying the central bank might move more aggressively to lower borrowing costs.

Analysts said Bailey39;s remarks triggered a substantial unwinding of stretched pound net longs, and that speculative positioning makes the British currency more vulnerable to shifts in sentiment.

The U.S. dollar edged down on Monday after a rally sparked by Friday39;s strong U.S. jobs data and an escalation in the Middle East conflict.

Sterling dropped 0.2 to 1.3090. It hit 1.3066 on Friday, its lowest level since September 12.

Britain39;s jobs market showed more signs of cooling in September, according to a survey likely to reassure the BoE as it considers whether to cut borrowing costs again.

The data calendar is not particularly busy in the UK this week, but marketmoving releases, including jobs data and the consumer price index report, are due next week.

The euro has halved its postBailey gains on Friday and was last up 0.28 at 83.81 pence per euro .

Sterling may experience volatility against the U.S. dollar given the uncertainty about the timing of rate cuts, but this is likely to be a shortterm phenomenon, said Dean Turner, chief eurozone and UK Economist at UBS Global Wealth Management.

Dollar weakness…