Euro stabilises after Cyprus rejects levy The euro rose against the dollar after politicians in Cyprus voted against a controversial bailout plan the previous night that would have seen the country's savers hit with a levy on their bank accounts. The single currency bounced off a four-month low hit the previous day to rise 0.5 per cent against the dollar to $1.2972. It rose 1 per cent against the Japanese yen to Y123.99 and was 0.2 per cent higher against sterling at £0.86. The single currency held to gains versus the dollar after the Federal Reserve said it would maintain its aggressive efforts to stimulate the US economy through large-scale bond purchases. Still, foreign currency analysts warned that the euro was likely to remain under pressure in coming days, with Cyprus yet to thrash out a new bailout proposal with its eurozone partners. Analysts at Morgan Stanley said: "The rejection of the bank deposit levy bill by Cyprus has dramatically increased euro uncertainty. If a compromise is not found and the concept of irrevocability of the euro is put to the test, then the downside risk to the euro will become more significant. The pound rose after George Osborne, UK chancellor, said the Bank of England would retain its inflation target of 2 per cent, as traders speculated that monetary easing was less likely in the shorter term. The chancellor said he had asked the BoE to consider giving more guidance on interest rate expectations to help households plan their finances and businesses plan their investments when it meets in August under the direction of incoming governor Mark Carney. The market read is that QE is not coming any time soon. The pound had already received support after the BoE sounded a warning note on the effects of monetary easing. Minutes from the bank's March meeting showed that members had been concerned that perceptions that its monetary policy would remain "excessively loose" could harm the pound.