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Sterling moved up to $1.5634 following the announcement of UK manufacturing data, which showed activity in the sector had grown by its fastest pace in 16 years, Reuters reports.
Philip Shaw, chief economist at Investec, said: "The PMI numbers are a very positive surprise which shows that the manufacturing sector is still going great guns and not showing any visible signs of disruption by the snow over the month."
This comes after the pound stood at $1.5550 before the data was revealed this morning, while it was at $1.5680 on New Year's Eve.
What's more, there was more positive news for sterling against the euro as the single currency could only manage an intraday low versus the pound at 85.64 pence.
Paul Robson, currency strategist at RBS, declared the UK austerity drive looks like it is "on course", pointing out euro/sterling is too high at these current levels.
Posted by Chris Weaver
