The pound fell back marginally against sterling on foreign exchange markets yesterday as the British currency staged a modest recovery against the deutschmark.

At the close yesterday, the pound was at 90.4p sterling compared to 90.7p at Friday's close, while the pound rose in the ERM and closed at DM2.6670, a rise of just over one pfennig on the day. Within the ERM, the pound was just over 11 per cent stronger than the weakest currency in the grid, the French franc.

Sterling regained just under two pfennigs against the D-mark and closed on DM2.9272, as dealers waited for the next big event that may impact on the value of sterling, tomorrow's inflation report by Bank of England chief economist, Mr Mervyn King.

The inflation report is just one of a series of key economic figures in Britain this week. Today sees the publication of retail prices figures while tomorrow sees the publication of average earnings and unemployment figures.