LONDON, Dec 29: The euro surged on Monday while the British pound fell further towards parity against the European single currency as the escalating violence in Gaza dominated markets, dealers said.

One euro was changing hands at $1.4304 in thin afternoon trading ahead of the New Year’s break, up from $1.4025 late on Friday. The yen also lost against the euro, which rose to 129.10 yen compared to 127.33 yen on Friday.

The dollar was down against the yen at 90.35 yen from 90.78 yen on Friday.

“The developments in the Middle East are likely to keep fuelling the euro at least for a day or two,” Yuji Saito, head of foreign exchange at French financial giant Societe Generale, told Dow Jones Newswires.

The dollar often faces selling pressure during conflicts in the Middle East which highlight Washington’s heavy reliance on the volatile region’s oil, with crude prices also rising as a result.

The European single currency meanwhile rose to an all-time high against sterling at 0.9794 pounds, putting parity within sight.

“The euro will probably touch parity with sterling in two weeks,” Saito said.—AFP