Investing.com - The dollar pulled away from seven-month lows against a basket of the other major currencies on Monday, while sterling pushed higher in the aftermath of a weekend terrorist attack in London.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.26% to 96.86 by 11.00 GMT.
The index hit a seven month trough of 96.61 on Friday, the weakest level since the U.S. presidential election on November 8 after a disappointing employment report.
The U.S. economy added 138,000 jobs last month the Labor Department reported, falling far short of economists’ expectations for 185,000 new jobs.
Most analysts believe the poor data will not stop the Federal Reserve from raising interest rates at its meeting later this month, but most market participants now expect a more dovish path in the second half of the year.
The dollar moved higher against the safe haven yen, with USD/JPY rising 0.19% to 110.59 after touching a two-week low of 110.31 overnight.
The yen showed little reaction after a group of Gulf states cut diplomatic relations with Qatar on Monday, leading to heightened tensions in the region.
Sterling also pushed higher, with GBP/USD last at 1.2901 after touching an overnight low of 1.2860.
The pound came under pressure after the third terrorist attack in the UK in less than three months killed at least seven people on Saturday.
The attack came ahead of Thursday’s general election, in which polls have indicated is much tighter than previously predicted, with Prime Minister Theresa May’s Conservative Party’s lead narrowing.
While pollsters still expect May will win the most seats in the election, a narrow win could throw Britain into political deadlock just days before formal Brexit talks with the European Union are due to begin on June 19.
Earlier Monday, data showed that growth in the dominant UK service sector slowed last month as political uncertainty ahead of the election and rising inflation weighed.
Financial data firm Market said the UK services purchasing managers’ index fell to 53.8 in May, down from April’s four month high of 55.8.
The euro moved lower, with EUR/USD down 0.35% to 1.1239 from a seven month peak of 1.1283 overnight.
In the euro zone, data confirmed that the currency bloc’s private sector kept growing at its fastest pace since the financial crisis last month.
The Markit composite PMI, which measures activity at service sector and manufacturing firms, came in at 56.8, matching April’s reading, which was the highest since 2011.