The pound strengthened against its major counterparts in the European session on Monday, amid indications of a breakthrough in Brexit talks as the U.K. has committed to EU negotiators that there will be no regulatory divergence on the island of Ireland. The U.K. has committed that there will be no divergence of the rules covering the EU single market and customs union for Northern Ireland post Brexit, according to media reports.

With the Brexit talks progressing on issue of Ireland, it seems more likely that negotiations would move on to the next stage.

In economic news, survey data from IHS Markit showed that British construction activity expanded at the fastest pace in five months in November, driven by solid rise in residential building work.

The IHS Markit/Chartered Institute of Procurement & Supply construction Purchasing Managers' Index rose to 53.1 in November from 50.8 in October. Any reading above 50 indicates expansion in the sector.

The currency showed mixed performance in the Asian session. While it rose against the franc and the yen, it fell against the greenback and the euro.

The pound firmed to a 2-1/2-month high of 152.72 against the yen and near a 5-week high of 0.8768 against the euro, from its early lows of 151.40 and 0.8833, respectively. The next possible resistance for the pound is seen around 154.00 against the yen and 0.86 against the euro.

The pound edged up to 1.3317 against the franc and 1.3539 against the greenback, from its early low of 1.3169 and a 4-day low of 1.3419, respectively. The pound is likely to challenge resistance around 1.36 against the greenback and 1.35 against the franc.

Looking ahead, U.S. factory orders and durable goods orders for October are set for release in the New York session.

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