The euro rose on Monday after a Reuters report that European Central Bank officials were shifting their debate from bond purchases to the expected path of interest rates, reviving bets that the ECB may raise rates sooner than previously thought.
Sterling pushed to its highest level against the euro in more than five weeks and against the dollar in more than a month, as Britain and the European Union appeared to reach a broad agreement on a post-Brexit transition period and the Irish border.
"It makes people more comfortable with the euro's strength, as people will monitor for any shift in ECB policymakers' tone," Chuck Tomes, senior investment analyst at Manulife Asset Management in Boston, said of the Reuters source-based report.
The debate among ECB policymakers is increasingly about the steepness of the rate path, as some want future expectations contained given the slow rebound in inflation, five sources with direct knowledge of the discussion told Reuters.
At 10:18 am (1418 GMT), the single currency was last up 0.23 percent, at $1.2315. But the euro weakened against the pound on relief over the latest development in the talks between Britain and the European Union agreement, which raised optimism about a smoother departure for Britain from the trading bloc.
Sterling was last up 0.49 percent at 87.66 pence per euro. It was up 0.75 percent, at $1.4045. The dollar index, which tracks the greenback versus a basket of six currencies, fell 0.228 points or 0.25 percent, to 90.005.
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