Sterling rose close to the previous session's 2-1/2 month high against the euro on Tuesday, as inflation data that met analysts expectations supported views that the Bank of England would not rush to cut interest rates.
British consumer price index figures showed that inflation rose further above the 2.0 percent target in August, propelled by surging petrol prices.
"The August inflation profile is the strongest in eight years, but this is largely a function of high petrol prices, while core consumer prices remain contained in the short run," Lena Komileva, G7 market economist at Tullet Liberty, said.
"This creates no pressure for the BoE to divert from its "wait-and-see" strategy near-term," she added.
At 1440 GMT, sterling traded at 67.34 pence against the euro, up a quarter percent on the day and near 67.10 pence hit on Monday - its highest level since late June.
Against the dollar, the pound was also up a quarter of a percent at $1.8233.
"The next issue for cable (sterling/dollar) and euro/sterling will be what the Bank of England does. It will be interesting to see in the vote (due out next week) from the last meeting if it went back to 9-0 for no change to rates," Westpac currency strategist Geoff Kendrick said.
"If there are any cutters in there, that could be quite a negative story for sterling," he added.
The BoE left interest rates unchanged last week after cutting for the first time in two years in August.
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