The pound gained ground on Wednesday (22 February), climbing above €1.19 for the first time this year, after official data showed the UK economy grew more than expected in the fourth quarter of last year.
Having breached the €1.19 threshold for the first time in 2017, sterling then retreated slightly and, by early afternoon, it was up 0.22% and 0.08% against the dollar and the euro respectively, exchanging hands at $1.2500 and €1.1843 respectively.
According to the Office for National Statistics, Britain's GDP grew 0.7% on a quarterly basis in the three months to the end of December, slightly ahead of the 0.6% gain recorded in the preliminary estimate last month.
However, the year-on-year reading showed Britain's economy expanded 2% in the fourth quarter, down from the 2.2% reading recorded in the preliminary estimate, which analysts expected to remain unchanged.
"Looking ahead, we still expect some slowdown in UK growth to an average of around 1.5% in 2017 and 2018 as higher inflation bites into consumer spending power, which in turn reduces incentives for increased business investment and hiring in consumer-focused sectors," said John Hawksworth, chief economist at PwC.
"But there could be some offset to this from stronger export growth as the world economy continues its gradual recovery and the pound remains at competitive levels for UK exporters."
Elsewhere, the euro extended the previous session losses, declining 0.22% against the dollar to $1.0515. The common currency was the the worst performer among the G10 currencies on Tuesday, amid mounting worries that Marine Le Pen could win the next general election in France.
Earlier in the day, the European Union statistics agency said inflation in the Eurozone grew 1.8% year-on-year in January, in line with the initial estimate published last month and matching analysts' expectations.
Across the Atlantic, the dollar struggled for direction ahead of the release of the minutes from the latest Federal Open Market Committee (FOMC) meeting, which will be published at 7pm GMT.
The greenback gained 0.25% and 0.43% against the Swiss franc and the Canadian dollar, trading at CHF1.0122 and CAD$1.3197 respectively, but slumped 0.64% against the yen to ¥112.95.
"The improving sentiment towards the US economy, prospects of higher US rates and the relentless 'Trump effect' have made the dollar king again," said FXTM research analyst Lukman Otunuga.
"The FOMC meeting minutes this evening which has the ability to fuel the current bull rally or potentially limit gains. If the FOMC minutes are in harmony with the recent hawkish comments from Fed official, then the greenback may be installed with further inspiration to trade higher."
Given they may strengthen the dollar, the minutes could consequently also have a major impact on the euro.
Joel Kruger, FX Strategist at LMAX Exchange, said: "While euro/dollar has come under pressure of late on the back of European political risk and ongoing hawkish Fed speak, the major pair hasn't really gone anywhere overall and is only just now arriving at a critical inflection point.
"Euro trading at $1.0500 is the level to watch and today's FOMC minutes could determine if we close above or below the major barrier."