Sterling rose against the dollar and held steady versus the euro on Wednesday, supported by a run of strong data that has underpinned expectations for a Bank of England rate rise, perhaps as early as August.
The market had only a muted response to Confederation of British Industry factory orders data, which was seen as broadly neutral. The order balance came in at -11 in July compared with -12 in June and forecasts of -10.
"It's (CBI data) slightly better than last time, not as good as the market expected, all a bit mixed up...the Ifo data was in a similar position," said Tony Norfield, head of foreign exchange research at ABN Amro.
Earlier the key German Ifo business sentiment index came in below consensus forecast but above what some in the market had been positioned for given recent weak data from Italy and Belgium. By 1358 GMT, sterling was up 0.20 percent at $1.8435 against the dollar, having earlier dipped to $1.8391.
Against the euro, sterling was steady at around 68.33 pence, close to Monday's two-month peak of 68.08 pence. Strong data last week, including above forecast inflation and economic growth figures, encouraged expectations the Bank of England could raise rates from the current 4.5 percent.
In a Reuters poll of economists, the median of 14 forecasts showed a 25-30 percent chance that the Bank of England's Monetary Policy Committee would hike rates at its next meeting on August 3. On Thursday, the British Bankers Association will publish its latest mortgage approvals data.
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