Sterling rose on Wednesday for the second session in a row to a one-week high despite dollar's recovery against a basket of currencies, and following forecast-matching manufacturing data from Britain.
GBP/USD last traded at 1.2637, up from the opening of 1.2585, with a session-high at 1.2657, and a low at 1.2543.
Sterling's rise came even after the manufacturing PMI for Britain fell to 55.9 in January from 56.1, matching expectations.
Sterling's gains came as inflation improved due to higher oil prices, while the local currency declines, raising expectations the Bank of England's meeting tomorrow could include hints at hiking rates or trimming down the stimulus program soon.
On the other hand, the dollar rebounded today from a three-month low hut yesterday, but the positive outlook for the pound underpinned today ahead of the Federal Reserve's meeting today.