The pound posted further gains against major currency crosses on Monday (11 September) ahead of the Bank of England's latest monetary policy committee meeting due later this week.
At 3:07pm BST, the pound was up 0.42% versus the euro changing hands at €1.1010, and exchanging at $1.3204 up 0.12% versus the greenback.
Many market analysts expect the BOE to strike a more hawkish tone, even though no one expects an interest rate hike just yet.
Societe Generale analyst Alvin T. Tan said the UK central bank is expected to stand pat on policy this week with a 7-2 vote.
"More important are the UK inflation and wage growth data releases due this week. If these surprise to the upside, the sterling rally will extend in the coming days. But this will merely provide further opportunities to go short on sterling crosses."
Regardless of the direction of the pound, the "mood music" is about to change, according to Richard Dunbar, head of economic and thematic research at Aberdeen Asset Management, who is expecting the Bank to set a hawkish tone.
"I think we will see hear warnings for investors and savers that interest rates won't stay this low for ever."
Meanwhile, the euro lost some steam versus the dollar, changing hands at $1.1985 down 0.42%. However, analysts reckon the US currency is not out of the woods yet, as the dollar index fell 1.4% in the past five trading days, taking the overall losses to 10.8% for the year so far.
Hussein Sayed, chief market strategist at FXTM, said with market expectations of a US rate hike in December falling below 40%, according to independent surveys, investors believe the tightening course for 2017 is over.
"Even bond markets are showing more pessimism, with US 10-year treasury yields dropping to 2.02% on Friday (8 September); the lowest since Donald Trump's election as President. Despite the extension of the debt ceiling for three months and Fed officials being optimistic about the economy, the greenback still failed to rally.
"Furthermore, the resignation of the Fed Reserve Vice Chairman, Stanley Fischer, is likely to be playing a significant role in keeping the dollar under pressure. His departure leaves four of the seven Board of Governors' seats vacant, meaning that Trump can reshape the Fed's policy, if he decided to bring more doves into the central bank. It's probably still too early to start speculating, and we will have to wait a little longer for clarity, when Trump nominates new governors."