Sterling strengthened across the board on Monday as data showing rising British house and factory output prices reinforced expectations the Bank of England will raise interest rates next month.
Prices of goods leaving UK factories rose more than expected in March to reach their highest in a year, while figures from property Web site Rightmove and the National Association of Estate Agents showed Britain's housing boom continued unabated last month.
"There is a fairly clear-cut case for a rate hike in May and the market was looking for excuses to buy sterling," said Adam Cole, senior currency strategist at Credit Agricole Indosuez.
Sterling scored its biggest gains against the dollar as Friday's disappointing US economic data and dovish comments from US central bankers encouraged investors to take profits on the dollar's recent gains.
Sterling was up two-thirds of a percent at $1.8084 by 1400 GMT, having risen as much as one percent earlier in the day. Last week, the pound fell below $1.7760 for the first time this year.