The euro dipped against the dollar after a key survey of euro zone services sector activity came in below expectations, while weak data on UK industrial and manufacturing output weighed on the pound.
This morning's Purchasing Managers' Index for the euro zone service sector dropped to 56.5 in October from September's 56.7, below analysts' forecasts for a modest pick-up to 57.0.
All components of the index showed a slight fall, while on a regional basis all three of the major euro zone countries reported a slight fall in sector activity.
Nevertheless, the headline index remains well above the 50 level which indicates expansion in the sector and continues to point to robust economic growth. It will do nothing to alter market expectations that the European Central Bank will raise interest rates again next month, analysts said.
"The index remains at a healthy expansionary phase and is unlikely to deter the ECB from hiking rates next month," said Zaki Kada at Thomson IFR Markets.
Elsewhere, the pound was lower after a set of weak data on UK manufacturing output, dropping to 10-day lows against the dollar.
The figures showed manufacturing output unchanged in September from August but rising 2.0 pct year on year, which was below expectations for a month-on-month increase of 0.2 pct and an annual rise of 2.3 pct.
Though the wider measure of industrial production showed a modest rise of 0.2 pct from August due to higher oil production, which was also below expectations.
"Manufacturing output was disappointingly flat in September, adding to concerns that the sector has passed its peak," said Howard Archer at Global Insight.
Though the weaker data will do nothing to prevent the Bank of England from raising interest rates by a quarter point to 5.00 pct on Thursday, it will raise speculation that rates may not rise any further in 2007.
"The results show that output in the UK is making a very gradual recovery and with sterling strong and global demand softening, any rate hike after this month will halt the recovery. The BoE should hence pause after its expected increase this week," Thomson IFR's Kada said.
Elsewhere, the dollar remained well supported after Friday's strong US employment data.
Though there is little in the way of US economic data this week, market players will be watching speeches later today by Chicago Federal Reserve president Michael Moskow and Cleveland Federal Reserve president Sandra Pianalto.