The dollar fell in Asian trade overnight after the Security and Exchange Commission subpoenaed the world's largest automaker as part of a probe into its accounting practices.
"I think the GM story is having an impact on the dollar and that is certainly providing a bit of a boost for sterling," AIB Group economist Geraldine Concagh said.
Sterling got another boost after weaker-than-expected US September durable goods data deepened the dollar's losses.
By 1418 GMT, sterling was up half a percent on the day at $1.7850, after hitting a one-month peak at $1.7903 earlier. The pound traded at 67.94 pence per euro, flat on the day. Bank of America currency strategist Kamal Sharma said while the dollar fallen sharply, there was scope for it to gain ground against sterling if US data on Friday was upbeat.
"The key number tomorrow will be inflation coming out from the Q3 GDP report. If that is a strong number combined with stronger-than-expected growth then that could be the catalyst for the dollar to reverse some of its recent weakness," he added.
The pound was also helped after data showed mortgage approvals for home purchases rose 17 percent on a year ago in a further sign of more buoyant activity in the British property market. Approvals rose to 70,105 in September from 69,499 in August and were up from 59,905 a year ago.