Having gained on Fridat, the pound has fallen back today against a broadly stronger US dollar

The pound continued to rally against the dollar on Friday, reaching a fresh monthly high of 1.6740, before relinquishing its gains as investors cashed in on profits made.

• Sterling continued to be supported on Friday by the view that the Bank of England’s decision to keep monetary policy unchanged suggests the UK economy may be stabilising.
  
• Demand for sterling remained intact after U.K. producer prices increased for a sixth month in August with a reading of 2.2%, adding to signs the recession may be easing.
  
• Sterling also drew strength from a small rise in weekly UK department store sales announced on Friday, which added to signs domestic consumer demand may be recovering.
  
• However later in the day, the pound fell prey to profit-taking as investors felt they had gone slightly long, which brought it back to close at 1.6657.
  
• The dollar has rebounded over a cent in trading this morning (0.7%) as traders felt the currency had been oversold, though analysts are saying that this is only a temporary blip in the greenback’s downward trend.