LONDON (AFX) - The euro was lower in early trade on the back of the lower weight given to European shares in the Morgan Stanley Capital Index over the weekend, dealers said.
They said that higher commodity prices had also served to undermine sentiment for the single currency.
"Gold is up to a 15 month high and Brent crude oil is also up," Jeremy Hawkins, chief economist Europe said.
"This has fuelled fears that inflation in the euozone will be above target for some time to come," he added.
Sterling gained strength against the euro on higher demand caused by an increase in the weight of British equities in the MSCI, dealers said. They added that the market was now looking ahead to the string of economic data due out at 9.30 am this morning.
"If lending holds firm then it will be consistent with consumer demand in the UK holding up," Hawkins said.
Commenting on M4 money supply data also due out, he said that "most money supply figures in the UK are ignored by the market nowadays." Some of the other data expected are PSNCR and non-EU trade.