LONDON: The European single currency hit a record high against sterling on Tuesday after a batch of disappointing economic data in Britain, dealers said.
The euro also rose against the dollar, despite a downbeat ZEW business confidence survey in Germany, as traders awaited earnings reports from major US banks for clues on the depth of the global credit crisis.
One euro was worth a record high 80.64 pence shortly after the British inflation data was published. It later stood at 80.48 pence or 0.8048 pounds.
The European single currency climbed to $1.5843 from 1.5828 in New York late on Monday.
Against the Japanese currency, the dollar slipped to 100.91 yen from 101.05.
Sterling tumbled Tuesday after official data showed that British inflation stood at an annual rate of 2.5 percent in March, unchanged from February.
The 12-month inflation rate held above the Bank of England s 2-percent target for a sixth month in a row, as declines in the cost of household equipment offset hikes to air travel and energy.
Earlier Tuesday, the pound had already spiraled lower against the euro on the back of downbeat retail sales data and fears of a sharp housing market downturn in Britain, traders said.
The Bank of England s rate-setting monetary policy committee cut British interest rates last week by a quarter-point to 5.0 percent, as they balanced near-term risks of higher inflation with a slowing economic growth.
March s UK consumer prices figures should give the Monetary Policy Committee scope to continue cutting interest rates over the next few months, said Capital Economics analyst Jonathan Loynes.
The European Central Bank froze eurozone borrowing costs last week at 4 percent, where they have stood since June.
Traders prefer to invest in currencies with higher interest rates so that they can enjoy higher returns.
Meanwhile on Tuesday, the euro was not far off the record high of $1.5913 that was struck last week amid jitters over the troubled US economy.
Later this week, all eyes will be on earnings releases from major US financial institutions including Citigroup and Merrill Lynch.
Traders will look for fresh leads in the Federal Reserve s Beige Book economic report due out on Wednesday, amid growing gloom over the outlook for the world s largest economy.
The currency market has already factored in a US economic recession and another interest rate cut by the Fed at the end of this month, said Hiroshi Sakurai, an analyst at Mizuho Investors Securities.
Traders remained skeptical about the chances of intervention by the Group of Seven (G7) industrialized nations in the near future to try to arrest the dollar s decline, despite signs of growing concern at their weekend meeting.
In London on Tuesday, the euro changed hands at $1.5843 against 1.5828 late on Monday, at 159.71 yen (159.99), 0.8037 pounds (0.7998) and 1.5810 Swiss francs (1.5805).
The dollar stood at 100.91 yen (101.05) and 0.9991 Swiss francs (0.9985).
The pound was at $1.9694 (1.9785).
On the London Bullion Market, the price of gold rose to $932.30 per ounce from $926.50 late on Monday. -AFP
