Sterling gained against the dollar and held steady versus the euro on Wednesday, as market players shrugged off UK mortgage and credit data to focus on the US currency's struggles.
Data released earlier showed that Britons shunned unsecured loans and ramped up mortgage borrowing in November 2005, providing evidence of some firming in the UK housing market even as consumer confidence remained subdued.
The Bank of England said consumer credit rose just 927 million pounds, the smallest rise in almost five years, while mortgage lending rose by 8.7 billion. Economists had forecast increases of 1.3 billion and 7.9 billion pounds respectively.
But the dollar had extended its losses against the euro and major rivals after reports of an earthquake in Mexico's Gulf of California.
That added to falls sparked by minutes from the Federal Reserve's December meeting released on Tuesday that suggested the US central bank was close to a peak in its credit tightening cycle.
"After the FOMC minutes last night, people are thinking that the Fed is pretty close to finishing with rate rises and that's the story today," Westpac currency strategist Geoff Kendrick said.
"Today's data was pretty much in line with expectations and so there was no real impact on the market," he added.
By 1452 GMT, sterling gained almost 0.6 percent against the dollar to $1.7548 after gaining 3 cents on Tuesday. The pound was flat against the euro at 68.78 pence.
Barclays Capital currency strategist Petya Koeva said that sterling was held back against the euro partly on renewed expectations for a rate cut in the UK.