Sterling hit a six-week high against the dollar on Wednesday as persistently high oil prices and soft US data dimmed expectations the Federal Reserve would raise interest rates aggressively in the foreseeable future.
US data showed orders for durable goods fell sharply in April, indicating a pause in the country's manufacturing recovery.
By 1400 GMT, sterling was up over a third of a percent at $1.8170, having earlier risen as high as $1.8200 - its strongest showing since mid-April. It was also a touch firmer against the euro, at 66.62 pence.
"Rate hike expectations in the United States are being scaled back and this is encouraging investors to move back into high-yielding currencies such as sterling," said Shahab Jalinoos, senior currency strategist at ABN Amro.
Data earlier showed the British economy grew an unrevised 0.6 percent in the first quarter of this year, slightly below consensus expectations. But a strong rise in household spending meant the figures did little to dampen expectations of several more UK rate rises this year.
"Although there was no upward revision, this doesn't alter the fact that UK output growth is strong enough to prompt further interest rate increases," said Brian Hilliard, economist at Societe Generale.
British house price and consumer confidence data, due on Thursday, are expected to be watched to see whether the Bank of England's three quarter-point interest rate rises since November have begun to take hold on consumers.
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