Sterling is expected to continue to rise versus the dollar this week ahead of a report expected to show that service growth remains near a ten year high.

The pound was valued at $1.9665 in early Monday foreign exchange trading and at 65.89p on the euro 

Elsewhere, market bets on the yen's low value have been hedged ahead of this week's G7 meeting, where EU finance ministers are expected to take a harder line on the currency.

Both French and German finance ministers have publicly advertised their concerns that the yen is valued artificially low in recent weeks.

Turbulence in the one-month yen options market reached a four month high at the end of last week as traders reassessed their positions on the yen's continuing falls.

Some analysts said that the G7 had no legitimate basis to intervene in the yen, however.

"It lacks any legitimacy or reasonableness to try to include the issue of a weaker yen in the G-7 communique," Osamu Takashima of the Bank of Tokyo told Bloomberg.

In the US, the Institute for Supply Management's index of non- manufacturing businesses January report is expected to show a 57 point rise when it is published today.