Sterling hit a fresh 2-1/2 year high against the euro after the latest opinion polls showed the governing Conservative Party has extended its lead over rivals ahead of Thursday's national election.
Meanwhile, the dollar stood its ground in the wake of Friday's jobs data.
Attention shifted to US Federal Reserve and European Central Bank policy meetings this week, while a deadline looms for the next wave of US tariffs on Chinese goods to kick in.
Top White House economic adviser Larry Kudlow said on Friday that a Dec. 15 deadline is still in place to impose a new round of US tariffs on Chinese consumer goods, but President Donald Trump likes where trade talks with China are going.
"If we see Donald Trump decide not to delay tariffs, that would lead to a risk off reaction in markets," said Nomura currency strategist Jordan Rochester.
"We don't expect tariffs to go into effect as the talks are ongoing," he said, adding he did not expect any "fireworks" from the central bank meetings.
The dollar index was little changed at 97.63, after rising 0.3% on Friday on news that US nonfarm payrolls increased by 266,000 jobs last month, the biggest gain in 10 months.
Europe's single currency traded at $1.1064, after hitting a one-week low of $1.10395 on Friday.
The dollar changed hands at 108.52 yen. It had lifted to 108.92 yen on the US jobs data before losing momentum.
Analysts said Friday's jobs numbers was positive for the greenback, bolstering expectations that the Fed would this week continue to signal a pause in its rate-cutting cycle.
"As long as more people are working and getting paid more, consumer demand is likely to hold up - that should keep the US economy going and reduce the likelihood of the Fed cutting rates again," said Marshall Gittler, strategist at ACLS Global.
Data meanwhile showing China's exports shrank for the fourth consecutive month in November, underscored persistent pressures on manufacturers from the Sino-US trade war.
Elsewhere, sterling rallied to a seven-month high at $1.3180 and to a 2-1/2 year peak versus the euro at 83.94 as the latest polls fuelled optimism that Thursday's election will end near-term Brexit uncertainty.
The ruling Conservative Party extended its lead over the opposition Labour Party to 14 percentage points, up from 9 a week ago, an opinion poll by Survation for ITV's Good Morning Britain showed on Monday.