The US dollar has slipped from earlier highs on the back of weakening factory data.

While the euro rose to $1.3488 and the pound climbed to $1.9904, the dollar dropped to 121.82 yen.

Factories data highlighted a lower than expected result of 0.3 per cent growth compared with a 3.1 per cent rise seen in March. Forecasters had predicted growth of 0.7 per cent.

Data released last week which showed the addition of 157,000 jobs in May has however helped lower expectations that the US Federal Reserve will cut interest rates in the near future.

Brian Taylor, a senior currency trader at M&T Bank, told Reuters: "The preference today for higher-yielding currencies is across the board.

"After a leg of gains in the dollar last week, now investors are back in the hunt for higher rates and higher yields."

Meanwhile in the UK, the Bank of England is due to announce its decision on interest rates later this week, with many economists forecasting that rates will remain unchanged.