The euro hit its strongest level against the pound in eight years on Wednesday after business activity in the eurozone continued to gather pace in August.
Purchasing manager (PMI) surveys across the shared-currency region showed impressive growth in manufacturing and continuing resilience in service sector output, with Germany the stand-out performer.
Eurozone composite PMI
The flash IHS Markit eurozone composite PMI rose to 55.8 in August, from 55.7 in July, defying forecasts of a fall to 55.5.
Growth in service sector activity slowed, however, holding back the overall index as the August services PMI slipped to 54.9 from 55.4 in the previous month.
Manufacturing activity was the outstanding performance in August, with the PMI index rising to 57.4 from 56.6 in July.
Any number above 50 represents expanding activity, and the higher the number, the greater the rate of expected expansion.
Some concerns over Germany's economic future were expressed in Tuesday's ZEW index of economic optimism in August, where a "high degree of nervousness" was apparent.
While July's PMIs had shown some slowing in the pace of growth, August's survey regained the momentum with the composite PMI rising to 55.7 from 54.7 as new business increased.
Manufacturing PMI registered its third-fastest rate of growth in nearly four years, buoyed by new export orders, which increased at the sharpest rate since May 2010. Services PMI rose to 53.4 from 53.1 - a two-month high.
IFO business confidence
Investors now look towards Friday's publication by the German IFO Institute of its business sentiment survey to see whether it tallies with the ZEW's nervy assessment by economic analysts, or with today's data from the eurozone's purchasing managers.
"Overall, this is another positive set of numbers for the euro area, which continues to enjoy its best growth spell for a number of years," said Andrew Harker at ISH Markit.
"Manufacturing PMIs in the Eurozone have been buoyant for quite some time now, but industrial production has failed to improve from its modest growth trend of recent years," said Bert Colijn at ING.
He added: "As most indicators point to further recovery of manufacturing activity, we do expect to see some improvements in growth for the months ahead."
The euro bounced, reaching its highest level against sterling since April 2009. The pound fell 0.4% to €1.0865, having hit a low of €1.0853 in the few minutes following the data. The euro gained 0.2% against the dollar to $1.1780.
Stocks found some support, and were up off their earlier lows, but still in negative territory in mid-morning trade. The Euro-Stoxx 50 eased 0.1%, while France's CAC 40 was flat and Germany's Xetra Dax slipped 0.1%.