Sterling hit a new 3-1/2 month high versus the euro and added to gains against the dollar on Wednesday on optimism that Britain and the European Union can agree a Brexit deal soon.
Britain's ITV News reported late on Tuesday that the two sides had made progress in negotiations over an Irish border backstop, a key hurdle in reaching a Brexit deal.
The British economy's summer surge turned out to be stronger than expected as warm weather spurred consumer spending and housebuilding, official data showed on Wednesday.
The data is likely to reassure the Bank of England about the economy’s momentum as Brexit approaches in March but it did not move the pound.
At 09:00 GMT sterling was up 0.1 percent versus the euro at 87.43 pence per euro
Against the dollar sterling firmed 0.3 percent to as high as $1.3186, its strongest level since Sept. 26, before easing back to trade flat at $1.3142.