THE pound has fallen back close to parity against sterling, trading at 100.2p late yesterday from 100.33p the day before, as British economic figures strengthened speculation of another interest rate increase. However, the pound gained ground against a weakening deutschmark, closing more than two pfennigs to DM2.4980.

Close attention will now be paid to British inflation figures out today, which may increase the pressure for a British rate rise and further strengthen sterling.

Mr Kenneth Clarke, the Chancellor of the Exchequer, rejected the clear cut advice of the governor of the Bank of England, Mr Eddie George, to raise rates in September, before bowing to the judgment of the bank a month later, it was confirmed yesterday.

Minutes of their meeting on September 23rd showed Mr George wanted a 0.25 per cent rise in bank base rates to 6 per cent there and then to keep the Government's inflation target within sight.