The pound hit a 10-month high as political uncertainty in Washington and waning hopes of an interest rate rise from the Federal Reserve weighed on the US dollar.
Sterling was up 0.45% versus the greenback at 1.319 in afternoon trading, reaching its highest level versus the greenback since mid-September.
Neil Wilson said President Donald Trump's failure to push through his reform agenda is starting to weigh on the currency.
"There's a lot of dollar softness out there with political uncertainty and doubts around the Federal Reserve's capacity to raise rates again this year weigh.
"The dollar index plunged to new 13-month lows below 93, a level that takes it close to pre-tightening levels. The dollar has lost 10% this year and is showing no signs of arresting that decline."
Versus the euro, the pound was flat at 1.117.
Investors were also digesting data from the Bank of England which showed UK mortgage approvals hitting a nine month low in June, while non-mortgage lending to consumers dropped from £1.8 billion in May to £1.5 billion last month.
The FTSE 100 ended the day relatively flat, up a mere 3.63 points at 7,372.
But London's blue chip index managed to outperform its continental peers, with the French Cac 40 dropping 0.73% and the German Dax down 0.37%.
Oil prices eased back from two-month highs which were originally sparked by reports that OPEC members will meet in Abu Dhabi next week to discuss compliance around agreed production cuts.
Brent crude was down 0.6% at around 51.91 US dollars per barrel.
In UK stocks, HSBC shares rose 13.4p to 757p after the banking giant announced a 2 billion US dollar (£1.5 billion) share buy-back programme and reported a 5% rise in pre-tax profit to 10.2 billion US dollars (£7.8 billion).
AstraZeneca climbed 87.5p to 4,569p after saying it had secured a "breakthrough" therapy designation from US regulators for its lung cancer drug Imfinzi.
However, the drug giant's shares failed to claw back losses felt last week, sparked by a setback in a separate lung cancer treatment trial.
Tobacco shares continued to suffer following last week's news that the US Food and Drug Administration (FDA) said it may force companies to cut nicotine in cigarettes down to non-addictive levels.
Imperial Brands ended the day down 195.5p to 3,120p, while British American Tobacco fell 246p to 4,713.5p,
Insurer Hiscox tumbled 55p to 1,298p after reporting that currency headwinds caused pre-tax profits to halve to £102.6 million in the six months to June 30.
When stripped of currency effects, the insurer's pre-tax profits rose 12.5% to £133.5 million.
The biggest risers on the FTSE 100 were Severn Trent up 88p at 2,240p, United Utilities Group up 26p at 897.5p, Hargreaves Lansdown up 38p to 1,380p, and Standard Chartered up 19.6p to 846.7p.
The biggest fallers on the FTSE 100 were Imperial Brands down 195.5p to 3,120p, British American Tobacco down 246p to 4,713.5p, Rolls Royce Holdings down 41p to 888p, and easyJet down 39p to 1,236p.
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