Sterling closed in on two-week highs against a broadly weaker US currency on Wednesday as gains in global equities supported investor appetite for higher yielding currencies.
Trade remained pinned in a tight range on investor caution ahead of the outcome on Thursday of the Bank of England's two-day policy meeting widely expected to leave borrowing costs unchanged at historic lows with market focus on whether it will raise its asset purchase programme above 175 billion pounds.
There is an outside chance the central bank might decide to expand the quantitative easing (QE) programme. There is also some speculation the BoE may reduce the rate on deposits that banks hold at the central bank.
Cable rose 0.4 percent on the day to $1.6546 by 1406 GMT, grinding closer to the $1.6590 peak reached intraday on Tuesday, its highest since August 21 on the dollar's broad fall and a higher-than-expected increase in UK industrial production. The dollar fell further against a basket of major currencies, weighed down by renewed questions over its long-term status as the world's reserve currency and investors moving out of dollar into other assets such as gold.
The dollar index was last 0.6 percent on the day to 76.89, a one-year low. Against the euro, sterling fell 0.3 percent to 88.08 pence by 1409 GMT, maintaining recent trends with sterling hamstrung ahead of the BoE policy decision.