The euro shed its gains against the dollar and fell back to 1.3015 after briefly reaching the 1.3075 session high in Europe. Investors were quick to sell the single currency on profit-taking as gains are seen limited ahead of the ECB meeting on Thursday. Market participants are on the side of caution as the recent rounds of weak Eurozone economic data could prompt the central bank to lower interest rates and with the uncertainty of the Italian election as politicians struggle to form a government.
The euro initially rose against the dollar to the European session high of 1.3075 from 1.3025 aided by the slightly better-than-expected composite PMI services data which rose to a seasonally adjusted 47.9 from the preliminary reading of 47.3. However the data remained well below the 50 level which implies the eurozone is still in a contraction phase.
The 90-day moving average rose above the 1.3000 support to 1.3043.
Cable rose to 1.5197 from 1.5130 aided by the better-than-expected UK services PMI and as the euro fell against the pound. The euro-sterling cross fell sharply by 45 points to 0.8590 from 0.8635.
The UK CIPS Services PMI rose to 51.8 in February, slightly above the median estimate of 51.0. The previous month of January was 51.5.
The services sector expanded in February suggesting the economy is showing signs of improvement in the UK.