LONDON: Sterling rose to a four-week high against the dollar and a basket of currencies on Wednesday after a string of recent better-than-expected UK data dampened the prospect of more Bank of England easing.
A Halifax survey on Thursday showing the biggest annual rise in UK house prices since September 2010 in the three months to May added to upbeat sentiment towards the pound.
The BoE is due to announce its latest policy decision at 1100 GMT and is widely expected to leave interest rates and its quantitative easing target unchanged.
The pound rose 0.2 percent to $1.5445, its strongest since May 10. Traders reported offers around $1.5450. Further gains could see it rise towards $1.5607, the May 1 high.
Stering's trade-weighted index also hit a four-week high of 81.1, BoE data showed.
Some traders were cautious that incoming BoE Governor Mark Carney, who takes over next month, may opt for additional stimulus to boost the economy and analysts said this could temper sterling's gains.
But a survey on Wednesday showing the UK's dominant service sector grew much faster than expected in May made this prospect less likely. It followed better-than-expected purchasing managers' surveys on manufacturing and construction which added to signs of a recovering UK economy.
"The PMI surveys suggest the economy has enough momentum to accelerate from here, which is encouraging," said Nawaz Ali, market analyst at Western Union Business Solutions.
"If US payrolls miss forecasts we may see sterling rise towards $1.56, but it's difficult to envisage further gains with Carney's arrival in mind."
The pound was helped by broad weakness in the dollar after weaker-than-forecast US private payrolls data on Wednesday dampened speculation of the Federal Reserve scaling back monetary easing. If key US monthly jobs data on Friday are also weak this would weigh further on the dollar.
Against the euro, the pound stood just shy of a two-week high. The euro was last at 84.97 pence, near a low of 84.90 pence reached on Wednesday.
The single currency could come under selling pressure if European Central Bank President Mario Draghi strikes a downbeat tone later on Thursday. The ECB announces a policy decision at 1145 GMT and Draghi's news conference is at 1230 GMT.
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