Although few significant economic data releases were due in the session, the outlook for interest rates was the dominant force behind losses for both the US currency and Japan's yen.
Recent hawkishness from the Bank of England was expected to be reflected in Wednesday's minutes from the bank's last monetary policy committee meeting earlier this month.
The central bank's quartery bulletin on Monday, said inflation expectations in the UK may not fall as quickly as inflation itself, echoing comments last week from BoE governor Mervyn King, warning of medium-term inflation risks.
Conversely, the US inflation picture moderated last week as core consumer prices in the world's largest economy came in weaker than expected.
The pound rose 0.3 per cent against the dollar to $1.9824, and by 0.2 per cent against the euro to £0.6774.
Against the yen, sterling rose to a fresh 15-year high of Y244.97 as investors continued to seek yield through carry trades. The Aussie dollar rose 0.4 per cent against the yen to a 16-year high of Y104.35, before easing back to Y103.90. The euro hit a new record high of Y165.63, and stood at Y165.39 by late morning in London, up 0.1 per cent.
The New Zealand dollar pushed into territory not seen in 20 years against the Japanese currency - up 0.7 per cent to Y93.21, despite suspected intervention from the Reserve Bank. The Kiwi slipped against the US dollar however, down 0.1 per cent to $0.7545.
"Although not officially confirmed by the RBNZ, the market is of the view that the New Zealand authorities were again selling the NZ dollar today," said Stephen Halmarick at Citi. "Indications are that the central bank is keen to see the Kiwi remain under the $0.76 level."