Sterling gained against a broadly weaker dollar and traded with a firmer bias against the euro on Tuesday, shrugging off soft data on the UK retail sector and property market.
Traders and analysts said sterling was benefiting from order-driven month-end demand for the currency and on talk of corporate take-over flows into sterling.
"We've had talk of some M&A related flows, which is an ongoing story for sterling," said Adam Cole, senior currency strategist at Royal Bank of Canada.
The pound has been supported in recent weeks by talk of a number of cross-border take-overs of UK firms that is likely to generate demand for sterling.
On Monday, Japanese firm Nippon Sheet Glass said it has agreed to buy the remaining 80 percent of British glass maker Pilkington it did not already own in a deal worth over $5 billion.
British retail sales volumes fell more sharply than expected in February, but shopkeepers predicted the decline would slow next month, an industry survey showed on Tuesday.
The Confederation of British Industry's distributive trades survey showed 22 percent of retailers reported sales volumes were up on the year in February, but 40 percent said they were down.
By 1450 GMT, sterling was up almost half a percent against the dollar, which fell against most major currencies, at $1.7462. The pound was also up slightly against the euro at 68.02 pence.
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