The market sentiment gained an additional boost from the news that a COVID-19 vaccine developed by German biotech firm BioNTech (O:BNTX) and U.S. pharmaceutical giant Pfizer (N:PFE) has shown potential and was found to be well tolerated in early-stage human trials.
Sterling traded at $1.2477 , flat in early Thursday trade but having gained 1.1% so far this week. The Australian dollar fetched $0.6919 , having gained 0.7% on the week.
The euro changed hands at $1.1252 (EUR=), maintaining its gain of 0.3% since the start of week.
The U.S. manufacturing activity rebounded more than expected in June, with the manufacturing activity index by the Institute for Supply Management (ISM) hitting its highest in 14 months as firms and businesses resumed operations.
Similar surveys from China, Germany and France all pointed to a recovery in factory activity while the ADP National Employment Report showed June private payrolls increased 2.369 million jobs.
Data for May was revised upward to show payrolls surging 3.065 million, instead of tumbling 2.76 million as previously estimated.
More closely watched jobs reports from the government, due later in the day ahead of U.S. public holiday on Friday, are expected to show an increase of 3 million non-farm payrolls in June.
There are concerns about whether the U.S. economy can sustain its recovery as coronavirus infections surge in many parts of the United States.
California dramatically rolled back efforts to reopen its economy on Wednesday, banning indoor restaurant dining in much of the state, closing bars and stepping up enforcement of social distancing and other measures as COVID-19 infections surge.
Against the yen, the dollar traded at 107.45 yen , having fallen 0.4% the previous day as it was unable to recover losses made in Asian trade on safe-haven bids.
"If we see further spikes in coronavirus cases, I would expect both the dollar and the yen to strengthen against other currencies," said Tohru Sasaki, head of Japan market research at J.P. Morgan.
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