Sterling rose on Monday as the dollar weakened against its rivals and investors focused on economic data that could help the pound recover after the Bank of England last week held rates and cut its growth projections.
At GMT 1010 the pound was up 0.4 percent at $1.3589 and trading flat against the euro to 88.20 pence..
On Thursday the BoE held interest rates steady as expected but cut its growth and inflation projections for this year and next, sending sterling to a four-month low against the dollar.
The decision left traders skeptical about whether the central bank will hike rates at all this year.
Market expectations of a rate hike in August are currently below 50 percent compared to nearly 60 percent at the start of last week.
Analyst at ING, though, said that the chances of a summer interest rate hike were being underestimated and that strong unemployment data on Tuesday could send the pound on a trajectory toward $1.37-1.38 range.
“An overall solid UK jobs report would go a long way to rekindling some of the lost BoE policy tightening sentiment in recent weeks,” said ING FX strategist Viraj Patel, in a note to clients.