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It increased against the weaker euro, which dropped by 0.7 per cent to 83.05 pence, Reuters reports.
Ian Stannard, senior currency strategist at BNP Paribas, said the spotlight is back on Europe this morning, adding: "The euro is suffering from a lack of credibility in the European stress tests."
However, the pound failed to make much impact on the dollar - it was slightly lower at $1.5379 - which intensified concerns about the UK housing market.
In a note, economists at Barclays Capital stated that retailers are still unsure about whether consumer demand will hold up throughout the remainder of 2010.
This news comes after forex traders witnessed sterling increase against the dollar yesterday morning, up about 0.2 per cent at $1.5480, but record a low versus the euro, the news provider reported.
Posted by Chris Weaver
