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Euro, pound slide against dollar

Euro, pound slide against dollar

The euro lost more ground against the U.S. dollar Monday, stricken by fears that efforts to avert a global recession are foundering.
The 15-nation currency slid to $1.2377 in morning trading in Europe, hovering around lows last seen in April 2006 and well below the $1.2612 it bought in late New York trading on Friday.
Britain's pound was battered, too, falling to $1.5366 _ more than 5 U.S. cents below the $1.5872 it bought Friday.
As recently as July, the pound was trading above $2 _ before turmoil in the financial sector and lower British interest rate expectations fueled a sharp decline. Around the same time, the euro was trading above $1.60.
Amid the market turmoil, the dollar has regained its coveted status as a safe-haven asset.
Analysts said concerns that government efforts in the United States, Europe and Asia many not be enough to shake off the likelihood of a recession were pushing the euro lower and boosting the dollar.
"Fear continues to grip global markets and traders are piling into whatever safe havens they can find," said James Hughes, an analyst at CMC Markets in London.
He said that, with the possibility of more rate cuts by the U.S. Federal Reserve Bank this week and the European Central Bank and Bank of England next week, there was little chance of the euro or pound rebounding.
"With the possibility of further emergency rate cuts being mooted there's unlikely to be any let up in volatility and given there's not much more scope for the Fed to ease rates overall, then it's difficult to see how the dollar can loosen its grip in the near term," Hughes said.
Fed policymakers are widely expected to lower the central bank's key interest rate at the conclusion of a two-day meeting Wednesday _ their last session before next week's presidential election.
While the Bank of England and the ECB have plenty of room to reduce borrowing costs from the current 4.5 percent and 3.75 percent, respectively, the Fed has much less room because its base rate stands at 1.50 percent.
Lower interest rates can undermine a currency, making it less appealing to investors as they look elsewhere for better returns.
In other trading, the dollar bought 92.43 Japanese yen Monday, down from Friday's level of 94.52.