The pound climbed to a one-month high against the US dollar on Thursday, boosted by better-than-expected UK retail sales data.
Sterling surged 0.4% against the US dollar to 1.252, marking its highest level since February 23.
Versus the euro, the pound also jumped 0.4% to 1.161.
It comes after Office for National Statistics data showed that month-on-month retail sales rose by 1.4% in February, exceeding economist expectations of 0.4%.
Connor Campbell, a financial analyst at SpreadEx, said: "The hawkish nature of this data was a boon to the pound."
He added: "UK retail sales surged... for now alleviating fears that rapidly rising inflation was causing trouble for the country's consumers - though that picture may well change in a few months' time."
The FTSE 100 also ended the day higher, up 0.2% or 15.99 points at 7,340.71.
It was helped in part by a jump in Next shares, which was the top performing stock on the FTSE 100, despite reporting its first fall in annual profits since the height of the financial crisis.
Next posted a 3.8% fall in underlying pre-tax profits to £790.2 million for the year to January, but saw its shares soar 314p to 4,199p as investors breathed a sigh of relief that the chain had not downgraded its forecasts for the year ahead.
Across Europe, the French Cac 40 rose 0.7% while the German Dax jumped over 1.1%.
In oil markets, Brent crude prices fell 0.3% to 50.61 US dollars per barrel (£40.41) amid concerns that Opec production cuts were failing to outweigh US supplies.
Pressure on oil, as well as subdued gold prices, weighed on commodity-linked stocks which held the bottom spots on the FTSE 100.
Randgold Resources fell 200p to 7,095p, while Glencore dropped 7.9p to 321.65p, and Fresnillo slumped 33p to 1,536p.
Royal Bank of Scotland Group shares rose 5p to 240p after the lender announced plans to close 150 Royal Bank of Scotland and NatWest branches and cut hundreds of staff, citing growing demand for digital banking.
Analysts said it signalled that RBS was making good on promises to slash costs.
Following the closures there will be 151 RBS and 856 NatWest branches left.
Crest Nicholson shares fell 1p to 560p after shareholders revolted over executive pay packets at the housebuilder's annual general meeting on Thursday.
Over 58% of investors voted against the company's remuneration report, which outlined plans to slash the pre-tax profit targets that help determine performance-based bonuses for its directors.
The biggest risers on the FTSE 100 were Next up 314p to 4,199p, Marks and Spencer Group up 12.4p to 337.3p, TUI AG up 30p to 1,123p, and Ashtead Group up 41p to 1,649p.
The biggest fallers on the FTSE 100 were Randgold Resources down 200p to 7,095p, Glencore down 7.9p to 321.65p, Hikma Pharmaceuticals down 46p to 2,026p, and Fresnillo down 33p to 1,536p.
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