The euro was 0.2 percent from a three-month low against the dollar after UBS AG Chairman and former European Central Bank governing council member Axel Weber said there was still a risk of a Greek default. The 17-nation currency traded within one yen of the weakest since February versus Japan’s currency after a Bloomberg Global Poll showed more than 50 percent of investors predict at least one euro member will exit the bloc this year. The pound rose against the dollar after the Bank of England halted its asset- purchase program. Sweden’s krona weakened as inflation slowed for a second month in April. “There’s still a lot of uncertainty from Greece and that’s been weighing on the euro,� said Jennifer Hau, a foreign- exchange strategist at Lloyds Banking Group Plc in London. “Sentiment toward the euro is going to remain weak and we’ll probably continue to see a downside bias in euro-dollar. The market will likely sell on the rallies.� The euro was little changed at $1.2944 at 7:31 a.m. New York time after falling to $1.2912 yesterday, the weakest level since Jan. 23. The shared currency gained 0.3 percent to 103.16 yen. It slipped to 102.76 yesterday, the lowest since Feb. 16. The yen was little changed at 79.70 per dollar. The risk of a hard default in Greece “is not off the table,� Weber said at a conference today in London. Spain’s problems carry an “extremely high contagion risk for Italy� and the rest of Europe, said Webber, who’s also a former head of Germany’s Bundesbank. Greece Stalemate As Greece faces political paralysis and voters protest against austerity measures, 57 percent of the 1,253 investors, analysts and traders who are Bloomberg subscribers said at least one country will abandon the euro by year-end. With a majority identifying a deterioration in Europe as a large threat to the world economy, respondents to the May 8 survey were increasingly worried Spain will default. Greece’s political turmoil entered its fourth day, with coalition talks deadlocked, raising the possibility that another election will have to be held as early as next month. Evangelos Venizelos, the leader of Pasok, today received a three-day mandate to form a government from President Karolos Papoulias. “The recent political developments in the euro zone are likely to weigh on the euro throughout the summer� even as the currency gets short-term support after falling to key technical levels, said Neil Jones, head of European hedge-fund sales at Mizuho Corporate Bank Ltd. in London. “There’s a lack of unity, a lack of co-ordination.� Pound Gains The pound gained versus 13 of its 16 major counterparts after the Monetary Policy Committee held its quantitative easing target at 325 billion pounds, ending a second round of stimulus. The decision was forecast by 43 out of 51 economists in a Bloomberg News survey. Officials also left their benchmark interest rate at a record low of 0.5 percent. The U.K. currency gained 0.3 percent $1.6171 after weakening as much as 0.2 percent. Sterling appreciated 0.2 percent to 80.04 pence per euro. The krona fell for a ninth day against the greenback after Statistics Sweden said the inflation rate slowed to an annual 1.3 percent, from 1.5 percent in March, The currency dropped 0.5 percent to 8.9499 per euro, and weakened 0.5 percent to 6.9117 per dollar. The euro has weakened 4 percent over the past six months, the worst performance among the 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar rose 1.5 percent, and the yen dropped 1.4 percent. To contact the reporter on this story: Lukanyo Mnyanda in Edinburgh at lmnyanda@bloomberg.net To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net

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