SINGAPORELONDON, Dec 5 Reuters The euro and pound hit over fivemonth highs against the dollar in early trade on Monday as improved sentiment caused by Chinese cities easing some COVIDrelated restrictions helped investors justify continuing their shift away from the greenback.

Official messaging about how dangerous the virus is has softened and financial hub Shanghai and Urumqi in the far western Xinjiang region were among the cities that announced an easing of coronavirus curbs over the weekend following recent, unprecedented protests against the government39;s uncompromising dynamic zeroCOVID strategy.

This boosted China39;s yuan, and the dollar fell below 7.0 yuan in offshore trade for the first time since mid September, and lost 1.36 on the onshore yuan to as low as 6.9473 on Monday, its weakest since Sept. 13.

The consequent optimism also helped European currencies to rally against the safe haven greenback. The euro hit 1.0585 in Asian hours, its highest since June 28, and sterling hit 1.2345, its highest since June 17.

Both currencies gave back those gains by London trading and the European common currency was flat at 1.0546 and the pound down 0.1 at 1.2268.

It may seem like they are baby steps but nonetheless quite a strong sign of China taking calibrated steps in the direction of reopening, said Christopher Wong, a currency strategist at OCBC in Singapore.

China is soon set to announce a nationwide easing of testing requirements as well as allowing positive…