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Dollar Extends Early Gains, Euro Slips

Dollar extends early gains, euro slips - The dollar extended early gains against a currency basket on Tuesday, sending the euro lower, while mixed GDP data and political instability weighed on the pound.

The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was up 0.25% to 94.04 by 09:28 AM ET (13:28 GMT).

The euro was weaker against the firmer dollar, with EUR/USD down 0.27% to 1.1719 after falling as low as 1.1691 earlier.

In the euro zone, data on Tuesday showed that German investor confidence fell to the lowest level in six years in July as fears over an escalation in trade tensions with the U.S. dampened the economic outlook.

The ZEW index of German investor sentiment dropped to -24.7 this month from -16.1 in June, the weakest reading since August 2012.

The dollar was also higher against the yen, with USD/JPY climbing 0.33% to 111.19, the most since May 21.

Demand for the dollar continued to be underpinned by expectations for a faster pace of rate hikes by the Federal Reserve this year.

The pound was a touch higher, with GBP/USD up 0.11% to 1.3273.

UK economic growth picked up to 0.3% in May from 0.2% in April, according to the first ever monthly GDP figures released earlier Tuesday.

The report painted a mixed picture of the economy, with modest growth driven by the services sector, partly offset by falling construction and industrial output.

Some analysts believe the data will keep the Bank of England on track for an August interest rate hike, but others fears that political instability may prompt policymakers to hold off.

British Prime Minister Theresa May is facing down a rebellion in her Conservative Party after Boris Johnson resigned as British foreign secretary on Monday, becoming the third minister to quit the government in twenty-four hours, rather than back her plans for a soft Brexit.

Meanwhile, the pound gained ground against the softer euro, with EUR/GBP losing 0.44% to trade at 0.8823.

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