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Tuesday 16th of September 2008
August 26, 2008

Dollar climbs to six-month high against euro


by Kay Murchie
”Dollar

The US dollar continues to benefit against a weak economic outlook in Europe and the UK, as it has climbed back towards a six-month high against the euro.

Meanwhile, against the pound, the US currency was trading at $1.8468, just below a two-year high.

The news is not so good for holidaymakers who have benefited from a strong pound when travelling to countries which use the dollar.

The news comes as Europe’s largest economy, Germany, has reported a five-year low in consumer confidence as fears of a recession and high inflation continue.

The report, by GFK, surveys around 2,000 consumers for its monthly consumer confidence guide.

Figures last week revealed that the German economy shrank by 0.5% in the second quarter compared with the first quarter of the year - the first fall in four years.

According to deputy economy minister ,Walther Otremba, Germany‘s economy could contract again in the next quarter, meaning the country would be officially in recession. It cannot be ruled out said Mr Otremba.

Germany was once seen as the main driver of growth in the eurozone.

Meanwhile, in the UK, Charles Bean, deputy governor of the Bank of England, said millions of families will be put under severe pressure by the worst economic crisis since the 1970s.

Mr Bean believes a widespread struggle to pay rising bills could lead to bankruptcies and home repossessions.

The UK’s annual rate of inflation surged to a record high of 4.4% in July. Inflation in the UK is now at its highest level since current records began in 1997.

The figure is up from 3.8% in June and is more than double the Government’s target of 2% and above analysts’ forecast of 4.2%.

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