GBP Strengthened against its major rivals following the release of the quarterly industrial survey by the Confederation of British Industry (CBI), which revealed the  UK manufacturing business optimism improved at the strongest pace since 2014 in the quarter to January. According to the report, business optimism in the UK's manufacturing climbed to +23 in the three months to January from -44 in October, which is the strongest it's been since April 2014. This also marked the largest change in sentiment (67 points) in a single quarter on record (since 1958). Export sentiment and investment intentions also improved over the quarter. Meanwhile, total new orders declined at the fastest pace (-21) since the financial crisis, and output volumes (-15) dropped at a similarly quick pace to last month. However, manufacturers expect the output to stabilize next quarter (+4, the strongest expectations in 7 months) and total new orders to increase (+9). The CBI's data eased investors' bets on BoE rate cut next week.

GBP was trading at 1.3110 against USD, 144.19 against JPY, 1.2727 against CHF and 0.8450 against EUR around 12:38 GMT.

Elsewhere, EUR traded mixed against its major counterparts amid expectations the European Central Bank (ECB) would strike a cautious tone at its meeting on Thursday. The latest Germany’s ZEW survey showed a bigger-than-expected improvement in investors’sentiment in January and the signing of a China-U.S. trade deal raised hopes for the recovery of the European economy as well. In addition, the Citigroup index of the Eurozone's economic activity increased to its highest since February 2018. However, economists note the improvements, which were seen in the business surveys, are not yet evident in actual economic activity, which was weak at the end of 2019. Thus, the ECB is expected to stick to its wait-and-see stance, acknowledging that downside risks have eased.