Sterling traded near a seven-week high against the dollar on Friday on expectations of stronger UK economic data and an earlier than anticipated interest rate hike, Reuters reported.
The pound nosed up 0.1 percent to $1.5553, not far from Thursday's $1.5574 which was its strongest since June 19. Traders said the next resistance level was $1.5607 hit on May 1.
The euro was flat against the pound at 86 pence, near Wednesday's one-month low of 85.785.
Analysts said, given the Bank of England's (BoE) guidance on Wednesday that it would tie unemployment to monetary policy, next week's UK jobs report would be even more closely watched.
"Labour market data clearly now becomes one of the key indicators given that they feed directly into policy," said Adam Cole, global head of FX strategy at RBC Capital Markets.
Investors were mindful that recovery could drive inflation up after the central bank included provisos in its guidance allowing it to raise rates, one being if inflation was at 2.5 percent or more in the next 18-24 months.
Inflation data for July is due out on Tuesday. UK inflation was 2.9 percent in June, well above the BoE's 2 percent target.
Analysts at Morgan Stanley warned that sterling's recent gains might be fleeting and that they look to sell into rallies towards $1.5700.