Investing.com - The euro was steady near five-week highs against the dollar on Tuesday, while the pound rose to almost six-year highs after robust U.K. factory data boosted expectations for a rate hike this year.
EUR/USD touched highs of 1.3697, the most since May 21 and was last at 1.3687.
The single currency remained supported despite data indicating that the manufacturing recovery in the euro area is losing momentum.
Revised data released on Tuesday showed that the euro zone’s manufacturing PMI dipped to a seven-month low of 51.8 in June from 52.2 in May. Growth in the German factory sector slowed to an eight month low of 52.0, while the French manufacturing PMI fell to a six-month low of 48.2.
A separate report showed that the region’s unemployment rate ticked down to 11.6% in May, revised from the initial reading of 11.7%.
The dollar remained under pressure after data last week showing a 2.9% economic contraction in the first quarter bolstered expectations that the Federal Reserve will keep rates on hold for an extended period.
Investors were turning their attention to the U.S. nonfarm payrolls report, due to be released one day early on Thursday, for further indications on the strength of the labor market.
GBP/USD added 0.24% to trade at 1.7145, the highest since October 2008. The pound gained ground after a report showed that the U.K. manufacturing PMI rose to 57.5 last month, up from 57.0 in May.
The data indicated that the U.K. economy continued to grow at a strong pace in the second quarter, fuelling expectations that the deepening recovery will prompt the Bank of England to raise interest rates before then end of 2014.
Elsewhere, the dollar edged higher against the yen, with USD/JPY rising 0.21% to 101.54, not far from Monday’s six-week low of 101.22. Meanwhile, USD/CHF was unchanged at 0.8868.
The Australian dollar rose to seven month highs, with AUD/USD up 0.23% to 0.9453, while NZD/USD was little changed at 0.8758.
The Australian dollar strengthened after the Reserve Bank sounded less dovish than expected after its left rates on hold at 2.5% earlier Tuesday.
The Aussie received an additional boost from upbeat Chinese factory data. China's official manufacturing PMI rose to 51 in June from 50.8 in May, while the revised reading of the HSBC manufacturing index confirmed that the sector expanded for the first time in six months in June.
The Canadian dollar was hovering near its 2014 highs, with USD/CAD at 1.0658.
The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was almost unchanged near the previous session’s two-month lows at 79.84