The pound rose to four-and-a-half year highs against the dollar on Thursday, after upbeat U.K. employment data on Wednesday fuelled expectations that the Bank of England will raise interest rates ahead of other central banks.
GBP/USD was last up 0.23% to 1.6834, the highest level since November 2009.
Cable was likely to find support at 1.6760 and resistance at 1.6950.
The pound strengthened against the other major currencies after data on Wednesday showed that the U.K. unemployment rate fell to a five year low of 6.9% in the three months to February.
Average earnings in the three months to February grew 1.7% compared with a year earlier.
The report came a day after data showed that the annual rate of consumer inflation in the U.K. fell to 1.6% in March, indicating that wages are growing faster than price increases for the first time since the height of the financial crisis in 2008.
The upbeat data bolstered the outlook for the wider economic recovery and prompted investors to bring forward expectations for a rate hike by the BoE to the start of next year.
Also Wednesday, Federal Reserve Chair Janet Yellen said that monetary policy will need to remain accommodative for some time, citing slackness in the labor market and low inflation.
Ms. Yellen said the risks of persistently low consumer prices outweighed those of high inflation. She added that the central bank sees room for the U.S. unemployment rate to fall to between 5.2% and 5.6% by the end of 2016. The unemployment rate currently stands at 6.7%.
Elsewhere, sterling was trading at six-week highs against the euro, with EUR/GBP dipping 0.05% to 0.8220.
In the euro zone, data on Thursday showed that German producer price inflation fell 0.3% in March from a month earlier and was down 0.9% on the year. This was below expectations for a 0.1% increase on the month and a 0.7% decline on the year.
The weak data added to concerns over the risk of deflation in the euro zone.