A fall in unemployment and signs of rising wages helped the pound claw back some ground on Wednesday.
The pound rose 0.2% to 1.099 euro - after hitting a 10-month low against the euro last week - as figures showed unemployment at a 42-year low and wages rising 2.1%.
The main UK stock market also rose for the third day in a row, with the FTSE 100 up 0.67% at 7,433 points.
Analysts pointed to an easing of US-North Korea tensions for the rise.
President Donald Trump welcomed reports on Wednesday that North Korean leader Kim Jong Un said he will monitor US conduct more closely before deciding whether to order a missile test.
David Madden, a market analyst at CMC Markets, said: "The upward move in stocks has been attributed to the easing of political tensions between the US and North Korea."
The smaller FTSE 250 rose 0.83% to 19859.24.
Mining firm Vedanta Resources was the best performer on the FTSE 100, rising 7%.
But the main surprise came from Balfour Beatty, the construction firm which said its half-year profit had risen nearly 70% due to a rebound in its UK construction business. Its shares rose 6.3%..
The one exception to the general rise in mining shares came from silver miner Hochschild which slumped almost 19% after it said its first-half profit were down by more than a third.