Sterling rose to a one-week high against the dollar on Thursday but slipped versus the euro after weaker-than-expected US inflation data pushed the greenback down across the board.
Sterling shrugged off mixed data which showed British retail sales rose more than expected last month, but fell more sharply than previously reported in January.
It also showed little reaction to a closely-watched survey that showed British house prices rose at their fastest pace in almost two years, as the focus remained on the dollar and the outlook for US interest rates.
"The dollar is down after the CPI. There was also talk of a pause (in US interest rate hikes) in the middle of the week," said Paul Mackel, currency strategist at ABN Amro.
Investors are also keen to see evidence that the British economy is performing well enough for the Bank of England to hold interest rates at 4.5 percent instead of cutting again.
"Many people expect the Bank of England to stay on hold rather than to reduce interest rates and that will give sterling a firmer footing," said Henry Wilkes, head of trading desk at Brown Brothers Harriman said.
"But sterling is sidelined these days, bashed around by movements in other currencies."
By 1455 GMT sterling had risen to $1.7532, its strongest in more than a week.
Against the euro it was down around 0.3 percent at 69.25 pence, having hit a seven-month low of 69.28 earlier this week.
British retail sales rose a higher-than-expected 0.5 percent in February. But data showed sales in January declined 1.6 percent, instead of a 1.3 percent fall originally reported.
The Royal Institution of Chartered Surveyors said its house price balance jumped to +17 in the three months to February, its highest since June 2004, compared with +9 in January.
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