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During early European deals on Wednesday, the British pound soared against its European, Swiss and Japanese counterparts despite a slide in equities. The pound strengthened to a 2-day high against the franc and an 8-day high against the euro.
But the pound eased from a 9-day high against the dollar.
Asian and European stocks declined today amid renewed concerns about the health of the eurozone banks.
Worries about Europe's banks resurfaced on Tuesday, after the Wall Street Journal reported that some major lenders had understated holdings in potentially risky government debt during "stress tests" designed to test their ability to weather crises.
U.K.'s benchmark FTSE 100 index is currently trading at 5,376.73 - up 31.12 points or 0.57% over its previous close.
In economic news, U.K. manufacturing output recorded an annual growth of 4.9% in July, bigger than the 4% growth seen in June, the Office for National Statistics said in a report today. The latest growth figure matched economists' expectations.
Industrial output growth also accelerated on a yearly basis in July to 1.9% from 1.3%. However, growth was slightly smaller than the consensus forecast of 2%.
Month-on-month, manufacturing output growth stagnated at 0.3% in July, in line with expectations. Industrial production rose 0.3% in July compared to consensus forecast of 0.4% increase.
The pound rose against the euro during early European deals on Wednesday and reached an 8-day high of 0.8205 at 4:15 am ET. On the upside, 0.818 is seen as the next target level for the pound. The euro-pound pair is now worth 0.8210, compared to yesterday's closing value of 0.8258.
The pound, which closed yesterday's trading at 1.5537 against the Swiss franc climbed to a 2-day high of 1.5605 at 5:00 am ET Wednesday. The next upside target level for the pound is seen at 1.581. The pound-franc pair is currently worth 1.5590.
The pound reached 129.58 against the yen at 4:55 am ET Wednesday, up from an Asian session low of 128.11. At present, the pound-yen pair is worth 129.40 and if the U.K. currency gains further, it may likely target the 131 level. The pair closed yesterday's trading at 128.78.
The pound that jumped to a 9-day high of 1.5496 against the dollar at 3:20 am ET Wednesday eased thereafter. Currently, the pound-dollar pair is worth 1.5438, compared to yesterday's close of 1.5360.
Traders are now likely to focus on the North American session, in which the U.S. Federal Reserve is due to release its Beige Book, a compilation of anecdotal evidence on economic conditions from each of the 12 Federal Reserve districts, at 2 pm ET. The report is normally released about two weeks before the monetary policy meeting is held.
The Federal Reserve is also expected to release its monthly consumer credit report at 3 pm ET.
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