Euro falls to 'two-week low'

The single European currency has fallen to a two-week low in Forex trading as a new manufacturing report has shown the recession continues to deepen on the continent.

David Watt, a senior currency strategist in Toronto at RBC Capital Markets, commented: "Europe is having more dismal data and that's why the euro is giving up its recent gains.

"The European economy will follow the same path of the US and the European Central Bank (ECB) may join the other central banks to have a zero interest-rate policy."

The ECB has revealed it will lower its main refinancing rate to 1.5 per cent in the second quarter of 2009.

Meanwhile, British sterling fell by 1.2 per cent against the US dollar as news came through from the Bank of England that mortgage lending was down in November.

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