Souvenir pillow shams were very popular during the Second World War. They were made by several methods, including embroidered and flocked or sprayed, and printed. Your pillow is a nice example of a souvenir pillow with the Veterans' Guard badge.
These made nice gifts for Mothers and Sweathearts. Here's a Canadian Armoured Corps pillow cover from my collection of Armoured Corps stuff. Cheers, John [You must be registered and logged in to see this image.]
Actually the colour on this one is badly faded. Originally it was red not pinkish. I would be interested to see some of the other variations, you should post some pics.