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Euro lower against dollar

(Agencies)
Updated: 2008-11-26 18:43

BERLIN -- The euro dropped back below $1.30 on Wednesday, giving up some of the gains it made against the dollar the previous day amid gloomy US economic data.

The 15-nation euro bought $1.2988 in morning European trading, down from $1.3022 in New York late Tuesday. The British pound fell to $1.5372 from $1.5440.

The dollar had fallen on Tuesday as data showed a deeper-than-expected cut in US consumer spending and falling home prices.

"The dollar is still under a little pressure as the recent cheer from safe haven status is increasingly being taken over by worry about the currency's lower yields," said Gary Thomson, head of sales trading at CMC Markets in London.

Low US interest rates have been a drag on the dollar in the past. The Federal Reserve has slashed its benchmark rate to just 1 percent; the European Central Bank's rate stands at 3.25 percent and the Bank of England's at 3 percent.

Cutting interest rates can prompt economic growth, but it also can undermine a currency as investors transfer funds in search of better returns.

In other trading Wednesday, the dollar dipped to 95.18 Japanese yen from 95.65 yen.