Pound Falls Amid Risk Aversion

The British pound weakened against the other major currencies in the early European session on Monday amid risk aversion, as investors focus on the Federal Reserve's next interest rate hike path.

The U.K.'s FTSE 100 index is currently down 1.02 percent or 59.58 points at 5,788, France's CAC 40 index is down 1.72 percent or 72.30 points at 4,128 and Germany's DAX is down 1.65 percent or 153.25 points at 9,134.

Federal Reserve Chair Janet Yellen will be on Capitol Hill for two days of testimony as investors anxiously await further clues on the next interest rate hike.

The latest jobs report painted a murky picture of the U.S. economy, with a slowdown in the pace of hiring but a decrease in the overall rate of unemployment and better-than-expected wage growth.

In the Asian session today, the pound rose against its major rivals.

In the early European trading, the pound fell to 0.7711 against the euro and 169.52 against the yen, from early 4-day highs of 0.7661 and 170.63, respectively. If the pound extends its downtrend, it is likely to find support around 0.78 against the euro and 164.00 against the yen.

Against the U.S. dollar and the Swiss franc, the pound dropped to 1.4484 and 1.4378 from early highs of 1.4547 and 1.4449, respectively. The pound may test support near 1.42 against the greenback and 1.41 against the franc.

Looking ahead, Canada housing starts for January and building permits for December and U.S. labor market conditions index for January are set to be published in the New York session.

At 12:05 pm ET, Bank of Canada Deputy Governor Timothy Lane will deliver a speech titled "Monetary Policy and Financial Stability—Using the Right Tools" at the HEC Montreal.

Chinese banks will be closed in observance of the Spring Festival holiday.