The euro touched fresh six-month highs against the dollar on Tuesday boosted by strong economic reports, while sterling remained broadly lower in the wake of a deadly suicide bombing at a pop concert in Manchester overnight.
EUR/USD hit a high of 1.1267, the strongest level since November 9 before pulling back to 1.1242 by 06.56 ET.
The euro hit the day's highs after data showing that eurozone private sector growth held steady at a six-year high in May, indicating that the economic recovery in the bloc is deepening.
The composite eurozone PMI, which tracks company growth across the euro area, came in 56.8 in May, matching April's figure.
The data came a day after the euro bounced higher when German Chancellor, Angela Merkel, called it "too weak".
The pound remained lower after police in the UK confirmed that 22 people were killed, including some children, and 59 injured, after an explosion at Manchester Arena at the end of a concert by Ariana Grande.
The perpetrator was a man acting alone, who died at the scene after detonating an improvised explosive device, the police said.
All political campaigning ahead of the UK general elections, due to be held on June 8, was suspended until further notice.
GBP/USD was down 0.2% at 1.2974, while EUR/GBP climbed 0.3% to 0.8669.
Sterling was also lower against the safe haven yen, with GBP/JPY down 0.24% to 144.35.
The U.S. dollar index, which measures the greenback's strength against a trade-weighted basket of six major currencies, was steady near Monday's six-month trough at 96.83.
The dollar has been hit as expectations for fiscal stimulus under the Trump administration faded amid political turmoil in Washington.
The dollar was little changed against the yen, with USD/JPY at 111.29.
The weaker greenback boosted the Australian and New Zealand dollars, with AUD/USD up 0.29% to 0.7500 and NZD/USD rising 0.66% to 0.7041.