Sterling has strengthened to a near two-month high vs dollar and a seven-year high vs euro on Wednesday ahead of a scheduled speech by the Bank of England (BoE) governor Mark Carney later in the day. The focus will then shift to Thursday's Q4 GDP update.
GBP/USD has risen to 1.5500, its highest since 2 January and from the previous close of 1.5457. EUR/GBP dropped to 0.7316 on Tuesday, its lowest since December 2007 and is holding near that low on Wednesday.
The UK currency has risen more than 0.7% so far this week, and from the multi-month low of 1.4951 touched in the last week of January, it has rebounded more than 3.5%. It has climbed 3% so far in February as against the 2.5% jump against the euro.
The immediate upside targets are 1.5600 and 1.5800 for GBP/USD. Against the single currency, Sterling has been rising over the past three months and has strengthened 8.7% over the same period.
In a speech on 24 February, Carney said low inflation now in UK is temporary and that the central bank is confident of bringing back the same to the 2% target within two years.
As per the January data, UK's inflation rate has fallen to a record low of 0.3%.
Carney had also said the policymakers are ready to cut the Bank Rate down to zero from the current level of 0.5%, if there is evidence for "deferred consumption", but as of now, the focus is towards hiking rates.
As per the preliminary data on 27 January, the UK economy expanded on 0.5% from a year earlier in the December quarter, missing forecasts. Major forecasts are not pointing to any revision in the second update of the GDP numbers on Thursday.
MPC member Martin Weale said on Tuesday that the UK economic growth is likely to be sustained but there are risks.
"There are obvious risks, most notably from developments over Greece and from the war in the Ukraine."