Dollar slip threatens British economy
(24 November 2006)

The US dollar slipped to its lowest level against the Euro for 18 months today, prompting concerns about the health of the US' ailing economy.

The Euro surged to approximately $1.30 (£0.67) early this morning on Asian exchanges, its lowest since April 2005. The pound also improved against the dollar to $1.93.

The deterioration of the dollar was prompted by speculation that the European Central Bank (ECB) will raise interest rates, following recent strong business indicators of future confidence in France and Germany.

"When we broke through $1.30 this morning that triggered an awful lot of stops,' Adam Cole, of investment firm RBC Capital Markets, told the Bloomberg news agency.

"We think there's more to come from the ECB and that could push euro-dollar higher.'

Dramatic falls in house prices across the US are driving the American economic slowdown, damaging employment in the construction sector and undermining domestic consumer confidence.

Britain's businesses could begin to feel the pinch as the US dollar continues to spiral downwards in value.

Fears are growing that a constrained US economy would impact negatively upon the British economy, particularly on the export-reliant manufacturing sector.