The euro remained near seven month lows this morning on mounting fears France will vote against the EU constitution this weekend, an impression reinforced by negative comments from former finance minister Nicolas Sarkozy. At one point the euro dropped to a low of 1.2535 usd from an overnight high of 1.2619, but recovered towards the 1.2550 mark after a spokesman for Sarkozy denied the remarks reported in the Times newspaper. Sarkozy, who now heads the governing UMP party, reportedly told French ministers during an ill-tempered meeting that Sunday's referendum vote "is lost". The "yes" campaign will tonight seek to regain the initiative, when French President Jacques Chirac uses a TV appearance to convince voters to support the constitution, but most analysts think it will be too little too late. "The euro has come under further pressure this morning following the release of a report that states that (Sarkozy) has privately admitted defeat over the forthcoming referendum," said Steve Pearson, currency strategist at HBOS. The euro has been pushed onto the backfoot in recent weeks by fears the French will vote against the EU constitution this weekend as well as concerns about the state of the euro zone economy. Investors have placed greater importance on developments related to interest rate differentials than structural concerns relating to the US's twin deficits. BNP Paribas global head of FX strategy Hans Redeker said there is now potential for the euro slipping to 1.2475 usd, but added that a negative outcome has largely been priced into financial markets.