Euro hits record high against British pound

The euro also rose against the dollar, despite a downbeat ZEW business confidence survey in Germany, as traders awaited earnings reports from major U.S. banks for clues on the depth of the global credit crisis.
Â
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 euro climbed to $1.5843 from $1.5828 in New York late on Monday.
Â
The sterling tumbled Tuesday after official data showed that British inflation stood at an annual rate of 2.5 percent in March, unchanged from February.
Â
The 12-month inflation rate held above the Bank of England's 2.0-percent target for a sixth month in a row, as declines in the cost of household equipment offset hikes to air travel and energy.
Â
"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.
Â
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.
  Â
The European Central Bank froze euro zone borrowing costs last week at 4.0 percent, where they have stood since June.
  Â
Traders will look for fresh leads in the Federal Reserves Beige Book economic report due out on Wednesday, amid growing gloom over the outlook for the world’s largest economy.
Â
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 dollars decline, despite signs of growing concern at their weekend meeting.

CONFIDENCE LESSENS IN GERMANY

Rising prices hit German investor confidence in April, the ZEW institute said Tuesday as it reported a surprise drop in its closely watched monthly economic sentiment indicator. "Economic expectations were affected by the extraordinary high price pressure in Germany this month," the ZEW said in a statement

"High rates of inflation reduce the available income of consumers and, hence, weaken private consumption. Low numbers of incoming orders of German companies point to slower growth in Germany as well," ZEW stated.