Sterling gained around half a percent against the euro on Monday after Spain's Telefonica SA said it would buy British mobile phone firm O2 Plc for 17.7 billion pounds ($31.6 billion).
The pound also shot to a 19-month high against the Japanese yen after Japan's Nippon Sheet Glass joined the fray, saying it had made a take-over approach for British glass maker Pilkington.
"The M&A news is providing some pretty good support for sterling across the board today," said Ian Stannard, senior foreign exchange strategist at BNP Paribas.
Sterling rose by as much as half a percent on the day versus the dollar, but gave up those gains after data from the consultancy Gfk Martin Hamblin showed UK consumer confidence decline to its lowest since March 2003.
Sterling rose as high as $1.7824, but as of 1500 GMT had retreated to $1.7730, barely changed from Friday's closing levels. The euro fell around 0.5 percent against the pound to 67.70 pence. Sterling also gained around 0.5 percent against the Japanese currency to 206.20 yen, after touching 206.60 yen, its highest since March 2004.
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