Euro and pound down on the dollar

The dollar weakened against the pound and the euro after the US rate cut

The euro and the pound both fell against the dollar on Friday following the news that the US economy is shrinking less quickly than expected.

The euro fell to $1.272 and the pound to $1.621.

The US Commerce Department announced on Thursday that the US economy shrank by 0.3% from July to September, less than the markets had forecast.

The US interest rate cut on Wednesday had sent both currencies higher against the dollar.

The euro had traded as high as $1.315 on Thursday morning on news that the US was cutting interest rates to 1%. The pound had climbed to $1.661.

The better-than-expected US economic figures have now reversed sentiment in the dollar's favour.

And with both the European Central Bank and the Bank of England expected to cut interest rates next week, the euro and the pound could fall further.

Interest rate cuts make currencies less attractive, as they reduce the rate of return for investors.