The pound kicked off the week on a tentative note, as the latest industrial trends survey from the Confederation of British Industry (CBI) painted a mixed picture for the UK manufacturing sector.

Sterling fell on Friday amid rising worries the European Union might adopt a hard stance over Britain's negotiations to leave the 28-country bloc, but recouped some of those losses on Monday (24 October).

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The pound was 0.14% higher against the dollar, fetching $1.2237 but edged 0.08% lower against the euro, exchanging hands at €1.1233.

"Sterling regained some ground after last week's inflation numbers, and a decent UK growth reading could underpin this support if it reinforces expectations the Bank of England will hold off from cutting interest rates at next week's policy meeting," said Laith Kalaf, senior analyst at Hargreaves Lansdown.

The declining pound has so far been met with a mixed response by the manufacturing industry, the latest CBI quarterly survey showed.

According to the latest report, the headline total orders balance from -5 in September to -17 in October went against the consensus expectation for no change but the quarterly expected export orders balance rose from +10 to +17, well above its historical average of +3.

Scott Bowman, UK economist at Capital Economics, said a weaker pound was providing some relief to domestic demand. "The fall in the pound appears to be performing its role as a 'shock absorber' by improving domestic competitiveness," he explained. "This should help ensure that GDP growth holds up fairly well after the third quarter, even as inflation starts to pick up."

Elsewhere, the euro was 0.10% against the dollar, trading at $1.0896, but the greenback was on the front foot against the yen, rising 0.15% to ¥103.96. The US currency also hit a year-to-date high against the Chinese yuan and was 0.12% higher against its Canadian counterpart, exchanging hands at CAD$1.3348.

"The dollar continues to advance at a gradual pace," said Societe Generale economist Alvin Tan. "There is room for further dollar gains given the still-low probability priced into the market of a Fed hike by year-end."