The pound has fallen back again on international markets, as speculation among international investors of an early revaluation of the currency's central rate in the ERM continues to wane. The pound lost more than two pfennigs against the deutschmark to an official close of DM2.6428 and it dealt down to DM2.64 later. Dealers reported substantial trading in the currency with continued heavy selling from some overseas investors. Sterling was also weaker against the deutschmark, adding to the pound's downward momentum against the other European currencies.

The Irish currency also closed lower against sterling at 93.81p. Dealers believe the pound could continue to ease against the other ERM currencies in the days ahead.

The pound has now fallen considerably from its recent peak of DM2.70, although it remains well above its ERM central rate of DM2.41. The weekend announcement that ERM entry rates would be set next May, at the same time that the member states of the new single currency are announced, has removed any pressure for an early revaluation of the central rate.