The euro ceded its gains on Tuesday as robust but lower-than-expected business growth data did not alter market expectations that rates in the United States and the euro zone will continue to diverge. IHS Markit's Euro Zone Composite Flash Purchasing Managers' Index, seen as an indicator of economic health, showed slower-than-expected growth. The PMI data was "certainly not strong enough to bring forward the timeline for an eventual rate hike for the (European Central Bank), but also probably not weak enough to push that timeline out any further," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.
With the US central bank likely to raise interest rates at least twice more this year and the ECB unlikely to raise interest rates until the second half of 2019, traders remained cautious about the outlook for the euro. The euro was trading 0.06 percent lower at $1.1684 after hitting an intraday high of $1.1717, Reuters data showed. The US dollar was lower against the euro and five other major currencies. Against the Japanese currency, the greenback fell 0.14 percent to 111.18 yen.
The British pound gained on news that Prime Minister Theresa May would lead negotiations on the country's departure from the European Union. "It helps remove some of the uncertainty over the outcome of Brexit," said Sireen Harajli, currency strategist at Mizuho Corporate Bank in New York. Sterling was up 0.36 percent against the dollar at $1.315. The currency has declined nearly 6 percent since late April.
In Turkey, a surprise decision from the central bank to leave interest rates unchanged sent the lira 3.14 percent lower to 4.886 lira per dollar. The Turkish currency has lost 30 percent of its value against the dollar in the past six months.
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