The euro and sterling rose on Wednesday as traders monitor the latest developments between the European Union and Britain on the latter's departure from the economic bloc, and the EU and Italy on the resubmission of the latter's 2019 budget.
Hopes the U.K. parliament would approve a draft accord for Brexit have bolstered the two currencies, while the euro has been bogged down by uncertainty on how EU officials would react to Italy's latest fiscal proposal after they rejected them last month for violation of certain EU rules.
"The focus is on Brexit and Italy. They have been putting pressure on sterling and the euro the past few days," said Minh Trang, senior currency trader at Silicon Valley Bank in Santa Clara, California.
Italy re-submitted its draft budget for next year to the European Commission with the same growth and deficit assumptions, but with falling debt, the new draft showed.
Meanwhile, U.K. Prime Minister Theresa May will meet with her cabinet when she will try to sell her Brexit agreement.
At 12:43 p.m. ET, the euro was trading fairly flat on the day against the dollar, erasing an earlier loss tied partly to weak regional growth data. Euro zone growth rose by 0.2 percent in the third quarter, official data showed, confirming its earlier preliminary flash estimate from Oct. 30.
Against the sterling, the single currency was up 0.2 percent at .8719 pence. The pound was down 0.22 percent at $1.2942 against the dollar. A stronger euro and pound pushed the dollar lower as it retreated further from a 16-month peak against a basket of currencies.
Traders brushed off a government report on U.S. consumer prices that showed domestic inflation grew at a moderate annual pace in October, although they recorded their biggest monthly increase in nine months as expected.
An index that tracks the dollar versus a basket of six major currencies was down 0.09 at 97.22 after hitting a 16-month high of 97.693 on Monday. Among other major currencies, the Swedish crown was little changed on the day after losing as much as 0.7 percent versus the euro to 10.278 crowns after weaker-than-expected inflation.