The pound touched a two-month high on the dollar and held close to its highest in a month on the euro on Wednesday as expectations of higher UK interest rates kept it buoyed.
British lending data released on Wednesday showed mortgage lending up by a record amount in April and consumer credit rising, although by less than expected, suggesting three interest rate hikes since the start of November have not yet put the brakes on a booming housing market.
The Bank of England's Monetary Policy Committee meets next week and analysts said speculation it may opt for another rate rise, after a hawkish set of minutes from their May meeting, was stoking sterling strength.
"The market is getting increasingly feverish that the Bank of England will raise rates next week and that supports sterling," said Tom Vosa, market economist at National Australia Bank in London.
The pound was trading 0.3 percent higher on the day at $1.8450 having touched a two-month high of $1.8486 earlier in the session.
It was trading steady on the day at 66.56 pence per euro. It touched its strongest in a month on Monday, at 66.37, and was hovering above euro support at 66.40.
Sterling's trade-weighted index, which gives the euro a 64.8 percent weighting, is at 106.00, its highest since mid April, which analysts said may give the Bank pause for thought.
"The rise in the exchange rate index, along with weaker than expected first quarter GDP and uncertainty over the impact of oil price rises all suggest "waiting and seeing" against stronger than expected survey data," Vosa said.
Consumer credit rose by 1.325 billion sterling compared with a 1.65 billion rise in March and lending secured on dwellings was up a record 9.8 billion sterling compared with 9.2 billion previously.
Short sterling interest rate futures are pricing in interest rates up by half a percentage point or more by September, from 4.25 percent at the moment. The Bank last raised rates in May.
"While a lot of the numbers are stacking up in favour of a rate hike in June or July, it's not absolutely clear they'll go ahead and do it next week," said Ian Gunner, head of currency research at Mellon Financial.