The pound rose to session highs against the dollar on Monday as last Friday’s upbeat U.S. nonfarm payrolls report for November continued to support risk appetite.
GBP/USD hit highs of 1.6391 and was last up 0.23% to 1.6385, holding below the 27-month high of 1.6441 struck last Tuesday. Cable was likely to find support at 1.6300 and resistance at 1.6441.
The U.S. economy added 203,000 jobs in November, well above expectations for jobs growth of 180,000, the Labor Department said Friday. The unemployment rate fell to a five year low of 7.0%.
The data bolstered optimism over the outlook for the U.S. economic recovery and reinforced expectations that the Federal Reserve will start reducing its USD85 billion-a-month stimulus program at one of its next few meetings.
The increase in risk appetite dampened safe haven demand for the dollar and the yen.
Demand for sterling continued to be underpinned after a recent series of upbeat U.K. data indicated that the economic recovery is deepening, boosting hopes that the Bank of England may tighten monetary policy before other central banks.
Sterling was trading close to the strongest level in five years against the yen, with GBP/JPY up 0.37% to 168.77, near highs of 169.12 hit last Tuesday.
The yen remained broadly weaker amid heightened expectations that the Bank of Japan will have to expand its stimulus program in order to meet its target of 2% inflation by 2015.
Elsewhere, sterling was higher against the euro, with EUR/GBP slipping 0.12% to 0.8373.
In the euro zone, data on Monday showed that Germany''s trade surplus narrowed in October as imports grew faster than exports, shrinking to EUR16.8 billion from EUR18.7 billion in September.
Germany exported goods worth EUR92.9 billion, up very slightly from EUR92.7 billion in September, while imports grew by 2.8% to EUR76.1 billion from EUR74.0 billion.
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