The US dollar index edged higher on Monday before a heavy week of data, while sterling was the weakest performer after tepid growth increased the likelihood that the Bank of England will cut interest rates this month.
In the United States, consumer price data on Tuesday and retail sales data on Thursday are this week's main US economic focuses. The greenback weakened on Friday after US job growth slowed in December.
The pound slipped after data on Monday showed that Britain's economy grew at its weakest annual pace in more than seven years in November.
"The UK story is a reminder that despite what may have been feared earlier, the US remains in solid shape ... whereas the rest of the world's struggling," said Win Thin, global head of currency strategy at Brown Brothers Harriman in New York.
On Sunday, another Bank of England policymaker, Gertjan Vlieghe, said he would vote for a rate cut this month unless economic data improved significantly.
The dollar index gained 0.10% to 97.457. Sterling dropped 0.53% against the dollar to $1.2990, after earlier falling as low as $1.2959.
The offshore Chinese yuan reached a 5-1/2-month high and the safe-haven Japanese yen dropped to a 7-1/2-month low as the imminent signing of a preliminary US-China trade deal boosted sentiment.
The US-China Phase 1 agreement, due to be signed at the White House on Wednesday, marks the first step toward ending a damaging 18-month trade dispute between the world's two largest economies.
Adam Cole, an analyst at RBC Capital Markets, said that in the absence of any significant announcements over the weekend "markets have defaulted to small risk-on moves".
The Australian dollar, which has been hurt by worries about the economic damage of the country's continuing bushfires, rose to a one-week high of $0.6919 before giving back those gains.
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