The dollar hit fresh 13-month highs against the euro and 14-month highs versus the pound on Monday after strong U.S. factory data last week cemented expectations for the Federal Reserve to keep raising interest rates. An unexpectedly big jump in the Institute for Supply Management's June index showed the manufacturing sector bouncing back from a slowdown, wiping away doubts the Fed will lift rates at least a few more times. The steady rise in U.S. rates has sparked a powerful rally in the dollar this year, driving it up 12 percent against the euro. The U.S. economy's strength has contrasted with the growth troubles in the euro zone and Britain, where mounting signs of weakness have raised the prospect of the Bank of England cutting rates and taken a toll on the pound. "All the data coming out of the U.S. shows the economy is firing on all engines," said Sharada Selvanathan, a currency strategist at BNP Paribas in Singapore. "Yield is driving this and will continue to do so." Last week the Fed raised official rates for a ninth straight time to 3.25 percent and signaled that it would not soon pause its tightening cycle. Euro zone rates have stood at 2 percent for more than two years while in Japan rates remain at virtually zero. Even the high-yielding Australian and New Zealand dollars have suffered as their rate advantage over the U.S. dollar shrinks. Rising U.S. rates have overshadowed investors' worries about the country's still-swelling current account deficit, which hit a record $195 billion in the first quarter. Trading was seen limited on Monday with U.S. markets closed for the Independence Day holiday. Few economic indicators were slated for release in Japan or Europe. At 0335 GMT, the euro was mired near 13-month lows just above $1.1900. The pound fell half a percent to trade around $1.7590 and is down as much as 4 percent in the past week alone. A misfit trade stirred some early confusion in sterling after its fall accelerated through $1.7650, traders said. The trade took place all the way down at $1.7505, but dealers said they were calling sterling's 14-month low around $1.7570. Against the Japanese currency, the dollar pushed up near 111.90 yen to hit 11-month highs before retreating to around 111.65 yen. Data released late on Friday also showed speculators in Chicago currency futures markets piling up more bets for the dollar to keep gaining, especially against the yen and sterling.