London, May 12: The euro battled to keep a grip on the promising rally it had begun to stage earlier in the week as disappointment at the rhetoric of the European Central Bank in its support set in on Friday. Its problems were compounded as sterling recovered some of its recent losses amid talk British interest rate rises could still be on the cards and as a British firm was revealed as the target of a takeover bid by a euro zone one.Speculation had surfaced that the euro reached its nadir last week. It had rallied as much as three percent against the dollar and five percent against the yen by Wednesday.
With the euro now having ceded at least half these gains, there were worries it could resume its slide. But traders said they were reserving judgement for now. "The 50 million dollar question is whether the euro has turned, and right now, given that euro/sterling is in the hot seat it could be the pound which holds the key," said a trader at a British bank in London.
The euro was at $0.9040 at 1158 GMT, about half way between the week's low near $0.8910 and the highs near $0.9125. It was near 59.70 pence, down about two percent from one-month peaks scaled only a day ago against sterling.
Swiss National Bank Vice President Jean-Pierre Roth briefly distracted dealers from the euro and sterling after he appeared to sanction Swiss franc gains against the euro.
Copyright © 2000 Indian Express Newspapers (Bombay) Ltd.