Sterling rose to a three-day high against the dollar on Monday but was little changed against other major currencies before a central bank policy meeting this week.
Markets do not expect the Bank of England to raise interest rates until early 2020.
Against the dollar GBP gained as much as 0.7 percent to $1.2945 but was steady against the euro and the Japanese yen.
With Japan out for a week of holidays, traders are worried the absence of Tokyo, one of the world’s top five currency trading centres, might fuel some exaggerated moves in foreign exchange markets.