The pound was up slightly against the dollar on Tuesday following a Bank of England declaration that interest rates will be put up again if necessary.

Sterling traded at $1.9728, up 0.2 percent against Monday's $1.9676 and topping last week's high point of $1.9701.

Masafumi Yamamoto, a currency strategist at Nikko Citigroup, told Reuters: "There is a risk for yields to ease back after a rapid rise, but if upcoming data is strong, yields will likely come under upward pressure while the dollar may be supported."

Mervyn King, governor of the Bank of England, said on Monday that the base rate would go up from 5.5 per cent if price pressures and capacity constraints remain at high levels.

The pound was up slightly against both the euro at the end of Monday, trading for 0.6785 after exchanging evenly for most of the day.

Inflation data for Britain and the US is due to be released this week, which will be closely watched by analysts.