The pound rose on Wednesday after a survey showing Britain's dominant services industry gained momentum last month fuelled expectations of a Bank of England interest rate rise this summer.
After a sluggish start to 2018, the British economy is showing tentative signs of a recovery with surveys this week for the manufacturing, construction and services sectors beating expectations.
That has brought some respite for sterling after weeks of losses caused by worries about whether Britain can secure a deal with the European Union before it leaves the bloc next March.
The pound rose to $1.3201, a five-day high, from $1.3176 before the data and away from 2018 lows hit last week of $1.3050.
At 15:10 GMT the pound was up 0.3 percent versus the euro at 88.18 pence and heading for its biggest daily gain against the common currency since the European Central Bank signalled on June 14 that any interest rate rise was still distant.