The pound hit a five-week high against the dollar on Monday (23 January), as the greenback weakened amid increasing concerns over Donald Trump's protectionist rhetoric.

Having ended last week on a downbeat note, sterling climbed as high as $1.2470, the highest level since mid-December, before retreating slightly over the course of the session. By early afternoon, the pound remained 0.60% higher against the dollar, trading at $1.2448, and was also 0.35% higher against the euro, buying €1.1594.

The UK currency could, however, find further gains difficult to come by over the next couple of weeks.

"Although there is a possibility of pound/dollar edging higher towards $1.2500, further gains may be limited when taking into account how uncertainty remains a key theme when dealing with sterling in the longer term," said FXTM research analyst Lukman Otunuga.

"The currency could find itself under renewed selling pressure in the medium term if anxiety mounts ahead of the article 50 invoke in March."

Across the Atlantic, the dollar was on the back foot against its main rivals, as worries over Trump's economic policies mounted.

"So far the new president has stoked protectionism but offered little detail on the good stuff – pro-growth infrastructure spending, stimulus," said Neil Wilson of ETX Capital.

"That's ensuring the dollar starts the week on the back foot, trading at its weakest since early December. We'll be looking for more details on spending and growth plans in the coming days, which could revive the long dollar trade."

The dollar tumbled 0.90% against the yen and fell 0.16% against the euro, exchanging hands at ¥113.59 and 0.9329 euro cents respectively. The greenback was also on the back foot against its Canadian and Australian counterparts, declining 0.09% against the former and 0.21% against the latter, to trade at CAD$1.3308 and AUD$1.3207.

"The instinctive reaction of markets to a more isolationist/protectionist world is to favour the currencies of countries with large current account surpluses, as these are the winners if capital stays at home," said Kit Juckes, head of forex at Societe Generale andIBTimes UK columnist. "That may be too simplistic, but the yen and Euro are natural initial winners."