Thanks Jerry, thats very interesting. I should have mentioned that my father served with the Welch Regiment before and during WW2 so he might well have bought it in Egypt.
As DrPMC mentioned, it seems to consist of professionally produced insignia mounted appliqué fashion on a black silk background, although having just looked at it more carefully I no longer think it was produced at home since a few small parts of the design are sewn straight through the background fabric.
Bookmarks