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Dollar falls on hopes of rate cut Pound continues fall against euro
(about 5 hours later)
Sterling has stayed near record lows against the euro, while the dollar fell on talks about possible US rate cuts and car industry bail-out scepticism. Sterling has fallen to a fresh record low against the euro, while the value of the dollar has declined on talks about possible US rate cuts.
Analysts predict the Federal Reserve will announce interest rate cuts on Tuesday after a two-day meeting. The pound touched a record low of 1.1084 euros, which made one euro worth 90.22p, before recovering slightly to 1.1141 euros.
Meanwhile, the pound was put under new pressure as a survey showed another sharp drop in UK house prices. Meanwhile, the dollar fell as analysts predicted the Federal Reserve would cut interest rates on Tuesday.
The dollar fell to $1.3465 against the euro and $1.4983 against the pound, Sterling was at 1.1128 euros. The dollar fell to $1.3541 against the euro and $1.5087 against sterling.
POUND STERLING v EURO: 15 December 2008*All Times GMTPOUND STERLING v EURO: 15 December 2008*All Times GMT
Sterling has now hit record lows against the euro for six trading days in a row.
"Sterling remains under pressure on continued UK economic weakness," said Geoff Kendrick at USB."Sterling remains under pressure on continued UK economic weakness," said Geoff Kendrick at USB.
Bail-out factorBail-out factor
The dollar declined on Monday as the US government said it might use money intended for banks to help carmakers. The dollar declined on Monday on worries over the strength of the US economy, and on the uncertainty surrounding the bail-out of US carmakers.
Some analysts think that if the plan is implemented, the financial sector will have less funds to spend if needed.
"An interim bail-out plan for US automakers by the Bush administration is certainly weighing on the dollar, with many being sceptical as to how the industry can cope in the longer term and instead thinking that letting the market take its course would be a preferred route," said currency analyst James Hughes at CMC Markets."An interim bail-out plan for US automakers by the Bush administration is certainly weighing on the dollar, with many being sceptical as to how the industry can cope in the longer term and instead thinking that letting the market take its course would be a preferred route," said currency analyst James Hughes at CMC Markets.
The euro was supported by suggestions from European Central Bank officials that interest rates in the eurozone might not fall too much further.The euro was supported by suggestions from European Central Bank officials that interest rates in the eurozone might not fall too much further.
Interest rates are at 2.5% in the eurozone, compared with 2% in the UK and 1% in the US.Interest rates are at 2.5% in the eurozone, compared with 2% in the UK and 1% in the US.