The pound rose the most in almost two weeks against the dollar amid speculation that the Bank of England will refrain from increasing its monetary stimulus at the end of a two-day policy meeting tomorrow.
U.K. government bonds fell, with 10- year gilts dropping for an eighth day, as a government report showed inflation stayed at the fastest since May, weakening the case for more central bank asset purchases.
Oil rebounded from a two-week low after a report showing improved investor confidence in Germany and a debt sale in Spain that exceeded targets countered concern that European credit may be downgraded.
West Texas Intermediate traded near its lowest closing price in a week after the American Petroleum Institute reported that U.S. crude supplies expanded. Brent was steady as Russia called for an end to violence in Ukraine.