Euro higher despite disappointing data; ECB stimulus is now seen more likely

The euro area's economic momentum risks slowing after expansion eased in September, Markit Economics reported earlier.

EUR/USD was last at 1.1258, up 0.42% and EUR/GBP climbed 0.29% to 0.7405.

Sterling, meanwhile, was higher against the dollar with GBP/USD last seen at 1.5204, up 0.12%.

A Purchasing Managers’ Index for manufacturing and services dropped to 53.6 in September from 54.3 in August, the London-based company said in a report on Monday. The figure is below a Sept. 23 preliminary reading of 53.9. A reading above 50 indicates growth.

Officials have pointed to challenges from weaker global growth to persistently high unemployment that could hurt the currency bloc’s economic revival, yet vulnerable.

The European Central Bank is struggling with the consequences of a drop in energy prices that is fading the effects of its quantitative-easing program.

Chris Williamson, chief economist at Markit, said that “the weakening of the pace of expansion in September raises the risk of growth fading further in the fourth quarter, which would in turn boost the likelihood of the ECB opening the QE taps further.”

The euro-area inflation rate dropped to minus 0.1 percent in September. Even so, according to Markt, the area’s economy possibly expanded 0.4 percent in the three months through September. New business rose last month and backlogs of work increased at the fastest pace in more than four years.

One of the region's strongest performers in the Q3 was Spain, whose PMI index pointed to growth of at least 0.8 percent. Similar data indicates that Germany, Italy and France expanded by 0.4 percent, 0.3 percent and 0.2 percent, respectively.