The Pound recovered from its weakness of June 2001 when it broke below its support level of $1.39 - $1.40 area in June 2001, falling to $1.36, its lowest point in 15 years.  The area around $1.40 was a significant area since the Pound found important support in that area around 1993 as well as 6 years ago.

The fundamentals are difficult to discern, if anyone really knows what the fundamentals are since there are so many things which could influence the currency, especially government intervention.  No doubt interest rates and trade deficits have an influence as well, although the trade deficit has been constantly growing even while the U.S. Dollar was at 20 year highs in the years 2000 to 2002. 

To get a better picture of what the Pound is doing click on the longer term trend (Monthly Chart) or (Weekly Chart).