LONDON (AFX) - The euro was largely unchanged from mid-afternoon Tokyo levels in early London trade, as investors stood on the sidelines unwilling to do much before the full resumption of trading in the US markets, dealers said. They said they expected trading to remain thin for the next couple of days and were now looking to see whether the European Central bank would cut rates following its board meeting today. They added that the probability of a cut has increased following the US terrorist attacks, but was unlikely following comments from the ECB yesterday downplaying the likelihood of a cut. "The market is in wait-and-see mode now," Daragh Maher, senior economist at ING Barings said. "The US government bond market will open later today which will give us some leads. People are not sure which way to jump as, one, they are not sure what the US will do militarily, and two, what the reaction to that will be," he added. "But the markets are encouraged by the reaction of the various central banks which have increased reserves and stand ready to cut rates if necessary," Maher said. "The next step is seeing what the US markets do when they reopen," he added. Michael Klawitter, a currency strategist at West LB said: "It will need the reopening of the US equity market to see how badly market sentiment has really been hit. Only then is it possible to assess the prospects for the dollar. Ahead of the reopening of the US equity market we do not expect the Fed - or any other major central bank - to cut rates. Once markets will re-open, a 25 basis point cut is on the cards." "Following yesterday's comments by (ECB president Wim) Duisenberg plus the fact that any concerted central bank action makes little sense until the US market is fully operating again, the ECB should hold rates stable today. Given some market positioning for a rate cut and the likely disappointment following the announcement, the euro-dollar should come under some pressure. The ongoing large euro long position in the market adds to this pressure," he added. Sterling was slightly weaker extending the trend from yesterday ahead of UK retail sales data due out later this morning. "If you look at the 5-day chart, today's movement is nothing," Maher at ING Barings said. Klawitter at West LB said: "The announcement that Schroder Venture and Goldman Sachs will buy the German Henkel's Cognis unit for 2.6 bln eur may put some short-term pressure on sterling."