The euro faded in the last 24 hours as positive sentiment about the announcement that Angela Merkel would be assuming the chancellorship in Germany gave way to misgivings over the ongoing uncertainty.

In particular, details of the coalition suggested that Ms Merkel will find it hard to push through employment law reforms, with the Social Democrats retaining a hold on the labour and finance ministries.

This morning the euro stood at 1.4551 to the pound, with the dollar closing to 1.1997 to the single currency.

"The fact that two ministries that are key to reforms are not in the hands of the CDU is fairly disappointing,'' Jeremy Stretch, Rabobank Groep strategist told Bloomberg.

"With the risks of policy paralysis, it's another reason to stay away from the euro.''

Meanwhile, news from the US concerning the base rate is expected later today from the Federal Reserve, with the minutes from the September 20th policy meeting potentially impacting on the currency markets.