The pound climbed to the highest since September, shrugging off Brexit concerns as it got a boost from a weaker dollar.
Sterling reversed a weekly decline as the dollar fell ahead of a U.S. inflationreport that follows weaker-than-expected producer prices on Thursday. The pound had been pressured earlier this week by continued signs of division over Brexit and disappointing U.K. economic data.
The pound gained 0.6 percent to $1.3617. It weakened 0.2 percent to 89.07 pence per euro, as the common currency rallied following a preliminary agreement in German coalition talks. The yield on U.K. 10-year government bonds rose two basis points to 1.33 percent.
Pound traders are likely to continue to focus on developments in the Brexit talks, as banks including Morgan Stanley were said to be activating contingencyplans and setting up headquarters in Frankfurt.