Sterling inched higher towards $1.30 today as the Conservatives lead in polls for Britain's general election.
That outcomes is seen as boosting the chances of Prime Minister Boris Johnson's EU withdrawal deal being passed by parliament before the January 31st Brexit deadline.
Johnson's Conservatives lead the opposition Labour Party by 10 to 17 percentage points, four polls on the December 12th election showed at the weekend.
A poll published by ICM for Reuters showed the Conservatives extending their lead over Labour to 10 points.
"(The) market's just moving to price in a higher likelihood of a majority for the Tories," Lee Hardman, currency analyst at MUFG, said.
"We've had the opinion polls at the weekend generally all showing increasing support for the Tory party, making the market more confident they could win a majority, seen as more favourable in the short term," Hardman said.
In a conference of business leaders organised by Britain's main business lobby, the CBI, Johnson said the government was postponing corporation tax cuts.
The CBI's director general warned that British businesses face the threat of extreme ideology from both the left and the right wing of politics. The pound was unchanged by her comments.
Versus the euro, the pound strengthened further to reach a new six-month high of 85.22 pence, last trading around 0.2% higher at 85.49 pence.
Labour is expected to release its manifesto on Thursday.
Analysts at JP Morgan wrote in a note to clients that a break above the $1.30 level was unlikely at this stage of the campaign cycle.
Weekly futures data showed that positions betting against the pound versus the dollar fell in the week to November 12th to the lowest levels since May.