Sterling hit a two-week high against the euro and rose sharply against the dollar on Thursday, benefiting from order-related trade and as the US currency lost ground on geopolitical concerns.
"I think someone's got a lot of buying to do. There's no fundamental reason for sterling's strength," said Steven Pearson, chief currency strategist at Halifax Bank of Scotland.
By 1400 GMT, sterling was up half a percent on the day at $1.8438.
Sterling traded at 68.93 pence, also up half percent after touching a two-week high against the euro of 68.89 pence.
"Euro/sterling is overvalued above 69.00, people are exiting their positions as it starts to roll under 69.00," said Adarsh Sinha, FX strategist at Barclays Capital.
The dollar lost ground as geopolitical tensions ratcheted up - talks between North and South Korea over the missile crisis collapsed, while Israel enforced a naval blockade of Lebanon and bombed Beirut airport in reprisals for Hizbollah seizing two soldiers and killing eight a day earlier.
Sterling briefly wobbled on news of two new appointments to the Bank of England's Monetary Policy Committee, with one of the new appointees perceived by some in the market to be biased towards keeping UK interest rates on hold for now.