The Confederation of British Industry said manufacturers were enjoying their best order books in six years and planned to raise production despite high oil prices and rising interest rates.
But the outlook for Britain's housing market looked less bullish as the British Bankers' Association said the number of new loans approved for house purchases fell more than 20 percent last month.
"Mortgage approvals are a good lead indicator for the housing market and these numbers provide further evidence the Bank of England's tightening is having a dampening effect," said Ryan Shea, senior currency strategist at State Street.
"Sterling has already had a sharp fall and is in consolidation mode."
The pound was one of the best performing currencies in the first half of the year but has fallen sharply over the past month as weaker data have encouraged investors to bet British interest rates may be close to their peak.
The Bank of England has raised interest rates five times since November to 4.75 percent. If the housing market continues to lose steam, many analysts reckon there may be just one more quarter-point hike in the pipeline.
Sterling traded at $1.7924 at 1425 GMT, down 0.2 percent on the day but above three-month lows of $1.7880 hit on Tuesday. The pound also traded with a slightly weaker bias against the euro, at 67.33 pence, having fallen to a three-month low of 67.83 last week.