Sterling hit a seven-month high against the dollar in Asian hours on Monday supported by economic data that showed the British economy was performing better than feared and that also drove expectations of more interest rate increases.
The pound hit $1.24475 in early trading on Monday, its highest level since June 10, 2022. Moves were exacerbated by thin liquidity due to the Lunar New Year holidays in major financial centres such as Hong Kong and Singapore.
The British currency was last trading flat on the day at $1.2470, and lost a little ground on the euro which rose 0.26% to 87.83 pence.
"Sterling continues to perform well and is holding onto the gains made last week on the back of high wage and core CPI readings," said Chris Turner, ING's global head of markets, in a note to clients on Monday.
"The firming up of BoE tightening expectations has allowed sterling to match this year's strength of the euro."
British inflation eased to 10.5% last month, data released on Wednesday showed, after hitting a 41-year high in October, But policymakers have warned of continued upward pressure on inflation from a tight jobs market.
Core CPI, which excludes energy, food, alcohol and tobacco, and which some economists view as a better guide to underlying inflation trends, was unchanged at 6.3%.
