"(The) euro zone PMI surveys will be watched closely for further signs the region is on the cusp of, or already in, recession," said economists at Wells Fargo in a note.
"In our view, the chances of at least a mild euro zone recession beginning in the latter part of 2023 are now becoming increasingly likely."
Sterling slipped 0.06% to $1.24545, but was not far from a two-month high of $1.2506 hit last week.
Ahead of China's loan prime rate decision later in the day, the offshore yuan firmed near a three-month high against the dollar and last stood at 7.2214 per dollar.
The Australian dollar , often used as a liquid proxy for the yuan, fell 0.17% to $0.6504, while the New Zealand dollar slipped 0.04% to $0.5990.
Sterling, Carol Kong
Federal Reserve, PMI, Fed, Commonwealth Bank of Australia, New Zealand
China, Asia, Beijing, Wells