Sterling hit one-week highs against the dollar and rose against the euro on Friday in the absence of major UK data, as markets continued to examine the domestic interest rate outlook.
Investors are speculating about the possibility of a UK rate cut next month, after a quarter-point trim in August to 4.5 percent, the first cut in two years.
The pound got a boost earlier this week from comments viewed as slightly hawkish by Bank of England Governor Mervyn King and Monetary Policy Committee members Paul Tucker and David Walton.
"Sterling has been gyrating with the euro in the last couple of days, but King made it clear he will most likely be voting against a rate cut in November," said Adrian Foster, head of currency strategy at Dresdner Kleinwort Wasserstein.
The MPC was split 5-4 over the August rate cut.
The pound rallied to one-week highs of $1.7652 by 1440 GMT, up nearly half a percent from the US close, following a choppy day of trading.
Sterling rallied 1-1/2 cents against the dollar late on Friday after weaker than expected US data on core inflation, industrial output and consumer sentiment.
The pound also gained from safe-haven buying after struggling US futures and commodities broker Refco said it had started unwinding proprietary and client positions.
The pound also rose a quarter percent against the euro to 68.32 pence, against the previous day's one-week highs of 68.18 pence and above two-month lows at 69 pence set on Monday.