European session: The euro rose

The euro rose as the U.S. debt deal struck overnight gave investors a much-needed confidence boost, but lingering uncertainties kept the gains in check, sustaining demand for safe-haven currencies like the Swiss franc and yen.
Although U.S. political leaders thrashed out a deal over the weekend, this still has to be passed by both the Senate and the House of Representatives later Monday, with the latter expected to be tight. Currency traders are also worried that the deal might not be sufficient to placate the rating agencies.
Manufacturing purchasing managers' indexes across Europe suggested the euro-zone economy got off to a weak start in the third quarter. The data showed that activity at euro-zone factories slowed to a near standstill in July, with even Germany recording slower growth than expected.
The economic situation looked worse in the U.K., however. The PMI showed that U.K. manufacturing activity unexpectedly contracted last month for the first time in two years. That saw sterling fall more than half a cent against the dollar to dip briefly below $1.64 and the euro climb to GBP0.8795 against the pound. But the weaker dollar helped sterling to rebound.
The pound has benefited in recent weeks from the market's focus on euro-zone and U.S. fiscal concerns but with a semblance of resolution to both crises, sterling may start to underperform, some strategists say.


US construction specding and ISM manuf index are in schedule at 14:00 GMT.