The pound climbed against its major opponents in the European session on Monday, following comments from Bank of England Deputy Governor Ben Broadbent that a tightening of the labor market could lift inflation, which is likely to comfortably exceed 5 percent in April next year.

"The aggregate rate of inflation is likely to rise further over the next few months and the chances are that it will comfortably exceed 5% when the Ofgem (regulator) cap on retail energy prices is next adjusted in April," Broadbent said in a speech to Leeds University Business School.

A tight labor market could fuel inflationary pressures, if wages continue to rise due to the competition for workers.

Broadbent, however, said that he had not made a decision regarding his vote on interest rate next week amid Omicron-related uncertainty.

Survey results from IHS Markit showed that UK construction activity logged a sharp expansion in November, led by the fastest upturn in commercial work since July amid reopening of the economy.

The Chartered Institute of Procurement & Supply services Purchasing Managers' Index rose to 55.5 in November from 54.6 in October.

The pound firmed to 0.8500 against the euro, 1.3286 against the dollar and 150.38 against the yen, up from early lows of 0.8547, 1.3210 and 149.04, respectively. The pound is seen facing resistance around 0.84 against the euro, 1.34 against the dollar and 152.00 against the yen.

The pound touched a 4-day high of 1.2252 against the franc, after declining to 1.2103 at 5 pm ET, its lowest level since January 25. Next key resistance for the pound is seen around the 1.24 area.

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