In New York trading, the U.S. dollar gained ground as investors assessed the prospects for a peace agreement between the United States and Iran. The British pound reversed earlier losses and posted a slight increase following the announcement of Prime Minister Keir Starmer's resignation, with markets anticipating a reduction in political uncertainty.

The U.S. Dollar Spot Index rose by 0.2%.

Iran stated that "significant progress" was made during overnight talks with the United States. The two sides are currently working to reach a peace agreement within two months.

The prospect of a potential end to the conflict also pushed the yield on the 10-year U.S. Treasury note up by approximately 5 basis points to 4.51%.

The pound/dollar pair increased by 0.1% to 1.3243, erasing an earlier decline of as much as 0.4%.

With Starmer outlining a departure timeline and potential rivals backing a swift power transition, Andy Burnham appears poised to become the United Kingdom's seventh prime minister in a decade.

The dollar/yen pair advanced 0.2% to 161.58, despite Japanese Finance Minister Shunichi Suzuki stating on Monday that the government would take appropriate action in the foreign exchange market if necessary.

The dollar/Canadian dollar pair rose by less than 1% to 1.4161 in choppy trading. This followed earlier data showing Canadian inflation had climbed to its highest level in over two years.

The euro/dollar pair declined by 0.4% to 1.1424.