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Reuters reports the British currency was priced at $1.543 by 09:31 BST, although this was around one per cent lower than the week's high.
The German IFO index defied forecasts to hit a level not seen for three years, pushing sterling and the euro up.
Speaking to the news agency, Paul Mackel, director of currency strategy at HSBC, described the pound as "very toppish".
"The German numbers are no doubt good, but this only brings to focus how long is this sustainable given large chunks of southern Europe and the US are slowing," he added.
Sterling had grown weaker, as investors sought safe-haven currencies like the dollar and Swiss franc.
This follows pressure on the pound after Martin Weale, the newest member of the Bank of England Monetary Policy Committee, said it would be "foolish" to rule out a double-dip recession.
Clive Arneil
