Pound hits 13-month high against US dollar
The pound has touched a 13-month high against the US dollar after strong housing and manufacturing data raised expectations of a UK rate rise.
The pound rose to $1.633 after Bank of England figures showed net mortgage lending hit its highest level for a year last month.
Other figures indicated that UK manufacturing had maintained its recent record pace of growth in February.
In afternoon trade, the pound had fallen back to $1.6293.
The Bank's figures showed that net mortgage lending - which ignores repayments and redemptions - was £1.8bn in January, the highest level since February 2010.
The number of mortgages approved for house purchases also increased, by 7% to 45,723.
However, analysts said the rise may have been a rebound from December's weather-affected numbers, and noted that the level of consumer credit fell by £333m, the biggest drop since October 2009.
The latest Markit/Chartered Institute of Purchasing and Supply (CIPS) survey found that its manufacturing purchasing managers' index stood at 61.5 in February.
The figure was the same as January's downwardly revised number, and the highest since the survey began in 1992. A reading above 50 indicates expansion.
However, the survey also found that inflationary pressures were persisting.
The survey's input cost index, which reflects the cost of raw materials such as cotton and metals, recorded a level of 83.7, down slightly from January's figure of 84.1.
But with raw material costs rising, one economist called the dip "a red herring".
"Clearly raw material prices are surging on global commodity price trends," said Investec's Philip Shaw.
The PMI survey also found that output prices from manufacturers had risen at the second-fastest rate in the report's history.
These price pressure have raised fears that the Bank of England will raise UK interest rates sooner rather than later.
"Input cost and output price inflationary pressures remain elevated, which may raise a further eyebrow amongst the members of the Bank of England's Monetary Policy Committee," said Rob Dobson, senior economist at Markit.