LONDON (AFX) - The euro was down against major currencies in early London trade as investors took profits on long positions ahead of the European Central Bank meeting on Thursday, dealers said. They said that the likely weakness of the European service sector PMI, due out tomorrow, would cast further doubt over the extent of the European growth outperformance relative to the US and, therefore add to the negative sentiment. Steven Pearson, head of currency strategy at Halifax Treasury Group said: "The dollar is reasserting itself having gone over the formidable hurdles it faced last week in the form of the weak economic data." He noted the market had positioned itself short of dollars versus the euro. "The positioning is manifesting itself with this morning's price action," he said. Meanwhile in the UK, sterling consolidated a touch firmer against most majors ahead of the release of the industrial and manufacturing output for September, due at 9.30 am. Both are expected to register month-on-month as well as year-on-year falls based on survey evidence so far. "Consolidation is now necessary. Sterling is looking a bit overbought," said Pearson. The strategist is confident sterling will fare well against the euro this week. "Firstly, the positioning backdrop suggests that the market is short sterling against the euro. Secondly, the MSCI benchmark is also expected to support sterling against the euro and the Monetary Policy Committee is more likely to win points for credibility this week than the European Central Bank," he said This, combined with Chancellor of the Exchequer Gordon Brown's comments at the Confederation of British Industry conference, which shifted back the EMU debate, would tend to push the euro/sterling pair lower, he said. "It looks increasingly unlikely that EMU is going to be a short-term negative for sterling," he added.