GBP/USD pulled away from 1.6306, the pair's highest since September 21, to hit 1.6268 during U.S. morning trade, still up 0.10%.
Cable was likely to find support at 1.6244, the session low and resistance at 1.6308, the high of September 21 and a five-month high.
Market sentiment was boosted by signs of progress in negotiations aimed at avoiding automatic tax hikes and spending cuts due to take effect on January 1, which investors fear could threaten U.S. and global growth.
Meanwhile, the pound found support after the minutes of the BoE’s December meeting showed that the monetary policy committee was split eight-to-one, with just one member in favor of further easing, while the vote to leave interest rates unchanged at 0.5% was unanimous.
In the U.S., the Census Bureau said that housing starts fell by 3% in November to a seasonally adjusted 0.861 million, compared to a 2.5% decline to 0.873 million.
Housing starts for October were revised down to 0.888 million units from a previously reported 0.894 million units.
The report also showed that the number of building permits issued in November jumped 3.6% to a seasonally adjusted 0.899 million, compared to expectations for a gain of 0.8% to 0.875 million.
Building permits issued in October totaled 0.868 million units.
The pound was lower against the euro with EUR/GBP adding 0.15%, to hit 0.8151.
Also Wednesday, data showed that German business confidence continued to improve in December, in spite of the deteriorating outlook for the euro zone economy.
The Ifo economic institute's German business climate index came in at 102.4 points this month, up from 101.4 in November, beating analysts' expectations for a reading of 102.0.