Euro (EUR)

BBC

The euro is on track for its worst weekly loss in 19 months after the European Central Bank said it will keep interest rates at zero until "at least next summer".

The currency slumped by almost 1.9% on Thursday following the announcement - its largest one-day fall since the Brexit vote.

It is flat this morning at $1.1565.

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The euro has gained some ground against both the dollar and the pound.

After falling to a six and a half month low against the dollar, the single currency is up 0.55% at $1.1602.

The euro is also up 0.40% on the pound at £0.8737.

Concerns over the political turmoil in Italy and the prospect of another election appear to have waned for now.

Greg McKenna, chief market strategist at AxiTrader, tells the news agency AFP: "As the third biggest economy in the EU, as a heavily indebted one, and with Eurosceptics seemingly in the ascendancy markets have worried that the EU again faces an existential crisis."

But he says: "I'll go out on a limb and suggest there are a bunch of experienced political operatives in Europe and some neophytes in Italy who might just have got the shock of their lives on how quickly this situation developed and we'll see some backpedalling."

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Prices on Italian two-year bonds jumped by 2.44% on Tuesday after an attempt by Italy's two populist parties to form a coalition government collapsed.

Shares in the country's banks fell as the wider FTSE MIB gave up 2.6%. Government bonds make up a large part of Italian banks' portfolios.

John Hardy, head of FX strategy at Saxo Bank, tells Reuters: "It is just a slide and as the slide continues, you ask where is the end."

He says: "If this continues for another couple of sessions I think you will have to see some official [European] response. A 'whatever it takes' kind of moment."

Back in 2012, when the the eurozone crisis swept across the single currency region, European Central Bank president Mario Draghi famously said he would "do whatever it takes" to save the euro.