Sterling rose in European trade against a basket of major rivals, resuming gains against euro after a hiatus and almost hitting ten-month highs after strong UK labor data. 

Such data bolstered the case for extended policy tightening by Bank of England for a longer duration, in turn underpinning the pound.

On the other hand, some analysts believe the European Central Bank might snap the current cycle of policy tightening following this meeting.

EUR/GBP fell 0.15% to 0.8584, with a session-high at 0.8612, after losing 0.7% yesterday, the first loss in five days on profit-taking off ten-month highs at 0.8536. 

UK Labor Data

Recent data showed UK unemployment fell unexpectedly in April while jobless claims fell as well, as average wages grew past estimates. 

Such data proved the flexibility of the UK economy, with Bank of England destined to raise interest rates by 25 basis points at the June meeting, with another likely 0.25% rate hike in August. 

European Central Bank

The ECB will issue its policy decision this week, expected to raise interest rates by another 0.25%. 

Canadian dollar fell against most major rivals on Monday as investors assess the Canadian labor market, which marked weak readings in recent data. 

Official Canadian data showed the economy lost 17.3 thousand jobs in May, while analysts expected an addition of 1.2 thousand jobs. 

Canada's unemployment rose to 5.2% last month from 5.0% in April, while analysts expected 5.1%.

On trading, CAD/USD fell 0.2% as of 20:04 GMT to 0.7478.

Yen

USD/JPY rose 0.2% as of 20:07 GMT to 139.5.

Government data showed producer prices in Japan rose 5.1% last month, compared to expectations of a 5.6%5 increase. 

Aussie

Australian dollar rose 0.2% as of 20:08 GMT to 0.6753. 

Gold prices declined on Monday marginally as the dollar gained ground against most major rivals, with investors awaiting policy decisions later this week.

Respected economist Muhammad Aryan said on his Twitter account, the markets are launching with a week filled to the brim with data and major policy decisions, with US inflation data released on Tuesday, following by policy decisions by both the Federal Reserve and the European Central Bank.

Investors are putting 75% odds on the Federal Reserve maintaining interest rates unchanged this week.

Otherwise, the dollar index rose 0.1% as of 19:49 GMT to 103.6, with a session-high at 103.7, and a low at 103.2. 

Gold spot prices fell 0.2% as of 19:49 GMT, or $5.5 to $1,971.7 an ounce. 

US stock indices climbed on Monday with eyes all focused on the Federal Reserve's meeting later this week. 

Respected economist Muhammad Aryan said on his Twitter account, the markets are launching with a week filled to the brim with data and major policy decisions, with US inflation data released on Tuesday, following by policy decisions by both the Federal Reserve and the European Central Bank.

Investors are putting 75% odds on the Federal Reserve maintaining interest rates unchanged this week. 

Dow Jones rose 0.1%, or 34 points as of 15:51 GMT to 33,910, while S&P 500 climbed 0.2%, or 9 points to 4,308, as NASDAQ added 0.6%, or 76 points to 13,335.