The dollar hit a 14-year low against sterling and a 20-month trough versus the euro on Friday after weak U.S. data reinforced expectations the Federal Reserve might cut interest rates next year. U.S. data on Thursday showed activity in the Midwest shrank in November for the first time in 3-1/2 years, which augured ill for the ISM manufacturing survey for November due later. Markets are also keen to hear from Federal Reserve chairman Ben Bernanke and other Fed officials who speak later, although in recent speeches they have delivered a generally upbeat view. "We are seeing dollar weakness as the market focuses on the weak real economic data in the U.S., while the euro zone just seems to go from strength to strength," said Tobias Thygesen, senior analyst, at Danske Markets in Copenhagen. The dollar fell as low as $1.9748 per pound , hitting its lowest for a second day since Sept. 1992 -- just before the UK abandoned the European Exchange Rate Mechanism, the precursor to the euro. Investors are looking for sterling to rally to the elusive $2 level, last reached also in Sept. 1992. However, the dollar recovered to $1.9673 to the pound by 1045 GMT, steady from the U.S. close, after data showing British manufacturing activity growth slowed unexpectedly in November to its weakest pace in eight months. The dollar also fell to a 20-month low of $1.3282 per euro for an eighth straight day, within a few cents of its record low of $1.3667 hit in December 2004, before recovering to $1.3224, steady on the day.