Investing.com - The dollar rose to 16-month highs against a currency basket on Monday amid expectations for the Federal Reserve to keep raising interest rates in December and beyond, while concerns over Brexit pressured the pound lower.
The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, rose 0.55% to 97.28 by 02:56 AM ET (07:56 AM GMT), the most since June 2017. The index has risen for the past three straight weeks, gaining 0.48% last week.
Demand for the dollar was underpinned after the Fed indicated last week that rates are likely to rise in December and again in early 2019, with the U.S. economy looking strong on almost every front.
The dollar rose to five-week highs against the yen, with USD/JPY climbing 0.3% to 114.16.
The pound was sharply lower against the greenback, with GBP/USD down 0.8% to 1.2868.
The drop in sterling came amid reports that British Prime Minister Theresa May had cancelled a cabinet meeting planned for later Monday to approve a Brexit deal amid a growing rebellion in her cabinet over her plans for exiting the European Union.
The pound was also weaker against the euro, with EUR/GBP advancing 0.33% to 0.8763.
The euro was lower against the firmer dollar, with EUR/USD down 0.6% to 1.1267.
The single currency remained on the back foot amid an ongoing row between Brussels and Rome after the European Commission rejected Italy's 2019 budget last month, because it was in breach of European fiscal rules.
Italy’s government has until Tuesday to submit a revised budget plan.