FRANKFURT, Germany --The dollar slipped Monday as the 13-nation euro climbed above $1.36 and the British pound resolutely held its ground above $2, undeterred by the threat of terrorism in England and Scotland.
In afternoon European trading, the euro bought $1.3605 before dipping back to $1.3601, up from $1.3535 late Friday in New York. It was less than a penny off its all-time high of $1.3682 set on April 27.
The purchasing managers index for the euro zone's manufacturing sector rose to 55.6 in June from 55 in May, signaling the economy was still on track.
The British pound rose to $2.0103 from $2.0077, shaking off terrorism fears following last week's two failed car bombings in London and the attempted weekend attack on the airport in Glasgow, Scotland.
"The prospect of renewed terrorist activity is failing to detract from the fact the Bank of England is tipped to hike interest rates at the end of the week," said David Jones, chief market analyst at CMC Markets. The bank's key rate is currently 5.5 percent.
The euro was up after German industry group VDMA reported that new orders for the country's machinery industry rose by 18 percent in May from a year earlier, with foreign orders particularly strong. Germany has the euro zone's largest economy.
The dollar slipped against the yen after a Bank of Japan business confidence survey supported predictions that the country's central bank may raise interest rates as early as August.
The dollar bought 122.56 yen, down from 123.14 yen late Friday.
The BOJ's quarterly survey of business sentiment for June showed the headline index for large manufacturers stood at 23, unchanged from the previous survey in March and in line with expectations.
Higher interest rates, a weapon against inflation, can bolster a currency by giving better returns on certain kinds of investments.
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