Sterling held above $2.01 against the dollar on Monday, helped by a supportive monetary policy stance after the Bank of England left interest rates on hold last week.

UK borrowing costs are expected to fall only gradually this year, a stark contrast to expectations for the U.S. Federal Reserve to cut rates by at least 75 basis points later this month as it grapples with slowing growth.

Aggressive U.S. rate cuts, implemented to try and stave of recession in the world's biggest economy, have undermined the dollar's yield appeal.

Negative sentiment on the U.S. currency has also played to sterling's advantage in recent weeks, but a stronger euro/dollar rate has seen the pound fall to record lows versus the single currency.

"What's going on in sterling is really reflecting broad based dollar weakness and strength in the euro. Last week's BoE decision and the worsening U.S. data has given sterling a little bit of a lift," said Geraldine Concagh, economist at AIB Group Treasury in Dublin.

By 0830 GMT, sterling was up 0.1 percent on the day at $2.0174, while the euro was broadly steady at 76.23 pence, having hit a record high at 76.92 last week.

UK investors await manufacturing and producer price data at 0930 GMT for fresh insight on the likely timing and size of the next UK rate cut from 5.25 percent.

Industrial production is seen rising 0.1 percent on the month in January and 0.5 percent on the year. The core producer price index is seen up 0.4 percent in February after increasing 0.8 percent in January.

"The inflation numbers coming out of the UK haven't been great and a dismal reading today will reinforce the view that the Bank of England won't want to do anything too quickly or aggressively," AIB's Concagh said.

Sourced by Reuters.