Euro down as investors expect another ECB rate cut
The euro fell today, to a 3 week low against the sterling and dollar, as investors expect that euro zone inflation figures will come below the 2% target set out by the European Central Bank. Data to be released later today is likely to show that the euro zone inflation rate falling to around 1.8% in December, down from 2.1% in November.
If the latest inflation figures come in below 2% as widely expected, it is likely that the ECB will have to cut interest rate again. The euro still holds an advantage over the likes of the dollar and yen, with euro zone interest rates at 2.5% compared to the almost zero of both Japan and the US.
The euro fell 1.3% against the dollar to $1.342 and 1.2% against the sterling at 91.4p, after its record high of 98.05p achieved last week. The dollar also hit a month high against the yen, finishing at 93.84 yen.