Commodity currencies gained sharply on Monday following positive data from China, while the British pound soared on expectations of early policy tightening by the Bank of England.

Investors bought the Australian and New Zealand dollars after a survey on Sunday showed China's factory growth held at an 18-month high in November, an outcome that was slightly ahead of expectations. Both Australia and New Zealand are highly leveraged to China's economic cycle.

Sentiment was buoyed further after a similar Chinese private manufacturing survey published on Monday was revised up from the preliminary reading.

The Aussie rose 0.5 percent to $0.9150 and the kiwi advanced 0.9 percent to $0.8195.

Sterling jumped to a two-year high of $1.6443, retaining its strength in recent weeks on the back of solid UK economic data and expectations that the Bank of England could raise rates earlier than most other major central banks.

The pound also hit a 10-1/2-month high against the euro at 82.75 pence and a five-year high of 168.55 yen.

By contrast, the Japanese currency continued to struggle after slumping more than 4 percent in November against the dollar and euro.

Investors have been selling the low-yielding yen to buy riskier assets in carry trades made attractive by the Bank of Japan's ultra-loose monetary policy.

Bank of Japan Governor Haruhiko Kuroda said on Monday that he would not hesitate to adjust policy, fanning speculation the bank could take more easing steps next year.

The dollar scaled a six-month high of 102.65 yen early on Monday, though it later dipped on profit-taking.

Reuters