Sterling hit a one-month high against the euro on Monday after strong economic data last week rekindled expectations for a hike in UK interest rates perhaps as soon as next month.
The Confederation of British Industry said its retail sales balance eased to +7 in July from +9 in June, a touch below retailers' expectations a month ago but still a sign of fairly robust sales growth.
Strong data last week, including above forecast inflation and GDP figures, sparked talk of a Bank of England rate hike to 4.75 percent in August, supporting sterling.
The spread between benchmark 10-year UK government bond yields and eurozone bond yields has widened to around 70 basis points from 65 in the last 10 days, and the gap between two-year yields has also grown on expectations for UK rate hikes.
By 1402 GMT, sterling was firmer on the day at 68.21 pence per euro, just off a one-month high of 68.10 pence hit earlier in the session.
On a trade-weighted basis, the pound hit its highest level in nearly two-months at 101.7. Against the dollar, sterling was down 0.37 percent at $1.8522, off an earlier session high of $1.8595, which had brought it within a few ticks of Friday's six-week high.