Euro Hits Two-Year Low Amid Economic Shifts

The euro and sterling have suffered declines due to disappointing business activity data, while Bitcoin approached a record high. Expectations are rising for European Central Bank rate cuts in December, and the Bank of England may also soften its stance due to weakening economic indicators. The strong dollar continues to pressure European currencies.

The euro fell to a two-year low and the pound also tumbled following data revealing major declines in business activity, while Bitcoin neared a record high just below $100,000. The euro slipped by over 1% to its lowest level since November 2022, as the eurozone's services industry contracted and manufacturing sank deeper into recession.

Market predictions now include an increased expectation of European Central Bank (ECB) rate cuts, with more than a 50% probability of a 50 basis points reduction in borrowing costs slated for December. "Today's numbers shifted the risks further downward," stated Frederik Ducrozet of Pictet Wealth Management. The ECB is anticipated to cut rates below 2% by 2025 if current conditions persist.

Domestically, British retail sales fell more than expected in October and business output shrank, hinting that the Bank of England may need to soften its monetary policy. Meanwhile, the dollar strengthened significantly, supported by political developments in the U.S. and ongoing expectations of inflationary pressures limiting Fed rate cuts.

(With inputs from agencies.)