The pound kicked off the week on the front foot, recouping some of last week's losses as it gained against its main rivals ahead of a week when politics are expected to take centre stage amid a lack of economic data.

By early afternoon, sterling was up 0.43% and 0.50% against the dollar and the euro respectively, exchanging hands at $1.2465 and €1.1743.

The UK currency had declined sharply on Friday (17 February), dipping below €1.17 after data showed retail sales suffered an unexpected slowdown in January, growing at the slowest rate for more than three years.

"[It is] a relatively quiet UK data calendar awaits this week, the highlight of which will be a second estimate of fourth-quarter GDP on Wednesday," said Chris Saint, senior analyst at Hargreaves Lansdown.

"This shifts the domestic focus back to the politics this week, with the House of Lords debating the Brexit bill which will permit the government to start formal EU withdrawal negotiations."

A report released by the Confederation of British Industry showed manufacturing orders grew at the strongest pace in two years in February, but the pound's decline in the wake of the Brexit vote had driven price pressures higher.

The price expectations balance, which shows the number of manufacturers who expect to change their prices over the next three months, rose to its highest in nearly six years.

"While this suggests that producer prices will rise sharply this year, it will take time for higher prices to fully feed through to CPI inflation," said Ruth Gregory, UK economist at Capital Economics.

"And intense competition is likely to mean that firms absorb some of the rise in costs."

Elsewhere, the dollar enjoyed a somewhat rare day of stability after the volatility that characterised the greenback for most of last week.

The dollar rose 0.28% and 0.16% against the yen and the Canadian dollar, trading at ¥113.16 and CAD$1.3117 respectively, but was broadly flat against the euro and the Swiss franc, fetching 0.9421 euro cents and CHF1.0033 respectively.

FXTM research analyst Lukman Otunuga said: "The increasing levels of volatility the greenback has dished out this month continues to highlight how the currency remains entangled in a fierce tug of war between the Federal Reserve hawks and President Trump.

Although it may be clear that Trump may want a weaker dollar to help US exports become competitive on the global markets, the heightened expectations of a proposed expansionary fiscal plan which will be supportive of US growth may uplift the greenback.

"While the Trump fuelled uncertainties and fears of protectionism policies impacting US growth may limit gains on the dollar in the short term, prices may be poised to rally higher in the medium to longer term on the prospects of higher US interest rates."