Euro coast USD1.4454

The euro and the pound climbed to new highs against the dollar in European trading Wednesday after U.S. consumer confidence slid to a two-year low and markets waited to see if U.S. interest rates would be cut.

Photo: Euro coast USD1.4454

The euro rose to US$1.4454, its fourth new high in four trading days, before settling back slightly, while the British pound crossed US$2.07, to maintain a 26-year high.

The 13-nation euro settled back to US$1.4441, up slightly from the US$1.4434 it bought in late New York trading the night before.

The British pound bought US$2.0701, up from US$2.0619 late Tuesday, sent higher by expectations that the Bank of England will keep its benchmark interest rate at 5.75 percent next week.

The euro and the pound have been climbing steadily against the dollar, regularly touching new highs since August amid fears over the health of the U.S. economy - worries stoked by the subprime credit crisis and disappointing economic reports - and rising oil prices.

Tuesday saw the release of more disheartening economic data, as the Conference Board reported that its Consumer Confidence Index fell to 95.6 - its lowest level since October 2005 - from a revised 99.5 in September. It is the index's third consecutive monthly drop and signals consumers' insecurities over the economy and their jobs.

Other critical economic reports scheduled for the rest of week include an advance report on gross domestic product and the releases of figures on third-quarter manufacturing activity and October employment.

Markets expect the U.S. Federal Reserve to cut its key interest rate from its current level of 4.75 percent Wednesday - adding to an unexpectedly bold half-point cut last month.

Although lower interest rates can jump-start an economy, they can weaken a currency as investors transfer funds to countries where their deposits and fixed-income investments bring higher returns. Higher rates can boost a currency.

In other trading, the dollar fell slightly against the Japanese currency to 114.67 yen from 114.77 yen.