Euro falls to fourteen month low against USD

The euro fell to its lowest value in relation to the US dollar in fourteen months as it stood at $1.1869 against the greenback on Tuesday.

One factor in the euro’s continuing weakness is the contrast between last week’s ninth consecutive rise in US interest rates by the Federal Reserve and discussions in the UK and the eurozone concerning possible interest rate cuts as a way to strengthen European economies.

In fact, the European parliament has added to pressure on the European Central Bank to cut interest rates by rejecting a report that approved of the bank’s policy by saying that ECB is too focused on stability while not taking into consideration the importance of economic growth.

The ECB has not raised interest rates in two years.

Another factor in the weakness of the euro is continuing speculation that the eurozone could break up, or at the least that a few nations might leave.

Meanwhile, sterling also lost value to the dollar as it stood at $1.7504, its lowest level in over a year ahead of a 2-day meeting of the Bank of England to begin on Wednesday.

Although a UK cut in interest rates is not expected to emerge from this meeting, such a move could come as early as next month.

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