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FX round-up: Euro pulls back from record levels

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Date: Friday 11 Apr 2008

LONDON (ShareCast) - The dollar rallied against the euro Thursday despite the European Central Bank (ECB) maintaining its key lending rate, as expected.

The ECB president, Jean-Claude Trichet, noted that the "level of uncertainty resulting from the turmoil in financial markets remains unusually high and tensions may last longer than initially expected," which some observers interpreted as a slight softening in the central bank’s opposition to a rate cut. The ECB has steadfastly resisted calls for a rate cut to add some fizz to the European economy, preferring instead to maintain rates as it struggles to keep a lid on inflation.

The euro bought $1.5741 in New York trading having hit $1.5911 at one stage.

Sterling also made headway against the euro in London trading despite the Bank of England confirming widely held expectations of a quarter point cut in its key interest rate. The common currency dipped in value to 79.94p, having hit an all-time high of 80.29p earlier in the day.

The British currency also improved against the greenback in London trading, rising to $1.9806 but surrendered the gains in New York trading, barely remaining above $1.97, as traders bet on further rate cuts to come from the Bank of England.

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