Against the euro, the pound EURGBP= was up 0.3% on the day at 85.05 pence, its strongest level since June last year.
Sterling GBP= was also up 0.4% against the dollar at $1.3442, extending a rise from the day before after a soft U.S. inflation print weighed on the U.S. currency.
Other factors supporting the currency in recent weeks include expectations for higher interest rates, resilient growth and record inbound takeover activity for British companies.
Investors also remain optimistic that Britain can forge closer ties with the European Union, ahead of a summit next week.
The latest escalation of hostilities in the Middle East has prompted investors to add to bets for rate hikes from the Bank of England this year, given the expected impact on inflation from higher oil prices.
Money market traders are fully pricing in a hike by the November policy meeting, with a second rate hike priced in by April 2027. Prior to the U.S.-Israeli war with Iran, investors had been expecting the BoE to lower interest rates twice this year.
"Relatively high interest rates are keeping sterling supported," said Chris Turner, head of global markets at ING.
"Maybe at the margin, the EU-UK summit can generate some modest sterling gains, so it's hard to call sterling lower for the time being."
FXB•
