A sharp fall in inflation might further weigh on market expectations of a rate hike. Money markets are pricing in an 80 percent probability of one interest rate hike next year.
The pound rose as much as half a percent to $1.2550 from below $1.25 earlier in the session. Against the euro sterling rose 0.3 percent to 90.27 pence.
Against the euro, the pound was broadly flat at 89.06 pence.
After a week in which a slew of ministerial resignations rocked May’s government, a confidence vote in her leadership has yet to materialise and she is clinging to power.
Raab said May’s plan threatened the integrity of the United Kingdom and he could not support an indefinite backstop arrangement where the EU held a veto over Britain’s ability to exit the bloc.
The pound rose 0.2 percent versus the euro at 87.11 pence.
The pound has benefited from growing hope among investors that Britain is close to reaching a deal with the European Union less than five months before it is due to exit the bloc.
However, sterling did edge lower in late European trading, partly as a result of a stronger dollar.
May threatened rebel lawmakers in her Conservative Party with a general election this summer if they defeated her Brexit plans on customs.
The pound rose to $1.3201, a five-day high, from $1.3176 before the data GBP=D3 and away from 2018 lows hit last week of $1.3050.