STERLING FELL to a record low against the euro yesterday, putting further pressure on already-pressurised Irish exporters.

The move came after an industry survey showed UK consumer confidence slumped to a 15-year low this month. Sterling also suffered after Britain's fourth-biggest mortgage lender said house prices rose at the slowest pace in more than a decade.

Economists now expect the Bank of England to lower interest rates at its April 10th meeting to shore up the economy after a jump in credit costs

Sterling slid to as low as 79.29p per euro and was at 79.18p as markets closed yesterday, having traded at 78.64p on Thursday and 77.86p a week ago.

The dollar was, meanwhile, headed for its biggest weekly drop against the euro as traders bet on the Federal Reserve cutting borrowing costs further while the European Central Bank (ECB) holds rates steady. The dollar traded at $1.5758 per euro in New York, compared with $1.5779 on Thursday.

European Central Bank officials yesterday talked down the prospect of early rate cuts by labelling euro zone prices "alarmingly high".

Governing council member Axel Weber said euro zone interest rates at 4 per cent would help anchor inflation expectations at a low level in a hint no quick rate cut was likely at a time when euro zone inflation runs at a record high of 3.3 per cent.

"Not only are current price pressures alarmingly high but, faced with moderate though basically robust euro zone economic growth, and the continued strong money supply expansion, there are medium-term upside risks to price stability," Mr Weber said.

ECB Executive Board member Juergen Stark told a conference in Cape Town that first-quarter economic growth in the euro zone was likely to be better than expected, adding: "In our view the fundamentals in the euro area are sound." He noted the euro zone had no major imbalances, company profitability was good and the labour market was improving.

But chairman of the Eurogroup of euro zone finance ministers Jean-Claude Juncker sounded more concerned, telling reporters in Luxembourg: "There are first signs that the real economy of the euro zone is starting to suffer from the overall state of the global economy. The signs are there for a strong economic slowdown."

Mr Weber, who is also chief of Germany's Bundesbank, said curbing inflation expectations was all the more important given the turmoil in financial markets. In a rare comment on the euro's exchange rate, he criticised the recent surge in the value of the currency, saying the volatility of the exchange rate was excessive.

"The euro, just recently, is excessively volatile, like many other financial market prices, stock markets." - (Bloomberg)