Sterling sat comfortably above the $2 mark on Monday, consolidating last week's move to 26 year highs, with investors unruffled by below-forecast producer price data as it failed to dent expectations for another rate rise.
The Bank of England last week boosted British borrowing costs for the fifth time since last August to 5.75 percent - leaving them some 50 basis points higher than the Federal Reserve's benchmark funds rate and raising the pound's yield appeal.
With the highest interest rates in the G7, sterling has benefited from investors indulging in carry trades, where funds are borrowed cheaply in low-yielding units like the Japanese yen to purchase higher return assets.
Data released earlier showed British factory gate inflation was a touch weaker than expected in June but firms' costs remained strong as oil prices picked up, with input price inflation rising for a fifth consecutive month.
Analysts said the softer-than-expected headline reading was not sufficient to crack bullish momentum that had built behind sterling, adding that the pound was also seeing gains from some central banks' routine reserve management tactics.
"It's a typical reaction when a currency has everything seemingly going for it momentum and positive sentiment. The conclusion is that this data is not going to dissuade the BoE from raising interest rates," Bank of New York currency strategist Neil Mellor said.
By 1407 GMT, sterling was up a quarter percent on the day at $2.0154 having hit a 26-year peak last week at $2.0207, according to Reuters data. The euro was down 0.2 percent at 67.60 pence.
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