Forex - EUR/GBP close to 5-week low as central banks eyed

Published 11/08/2012, 06:15 AM
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Investing.com -The euro was little changed close to a five-week low against the pound on Thursday, as investors eyed upcoming policy setting meetings by the European Central Bank and the Bank of England.

EUR/GBP hit 0.7973 during European morning trade, the session low; the pair subsequently consolidated at 0.7990, inching up 0.01%.

The pair was likely to find near-term support at 0.7970, Wednesday’s low and a five-week low and resistance at 0.8011, the high of November 5.

The euro came under pressure amid speculation that Thursday’s successful Spanish bond auction would ease pressure on Prime Minister Mariano Rajoy to request a bailout before the end of this year.

Spain sold EUR4.76 billion of three-year, five-year and 20-year bonds, which will allow the country to meet its financing requirements for 2012.

Concerns over Greece remained after the country’s parliament narrowly approved fresh austerity measures needed to secure the next installment of bailout funds late Wednesday, as the measures were likely to exacerbate the country’s recession.

Meanwhile, investors were looking ahead to the ECB’s policy-setting meeting and President Mario Draghi's press conference later in the session, amid concerns that the economic slump in the bloc in deepening.

The pound was under pressure ahead of the BoE’s policy-setting meeting, after recent weak economic data dampened hopes for a sustained economic recovery in the U.K., but the central bank was not expected to announce fresh easing measures.

Overall market sentiment was weighed by concerns over the U.S. fiscal cliff, automatic tax hikes and spending cuts due to come into effect on January 1 unless lawmakers can reach an agreement, which could threaten U.S. and global growth.

The euro was trading close to a two-month low against the U.S. dollar with EUR/USD down 0.22% to 1.2744 and was weaker against the yen, with EUR/JPY falling 0.43% to 101.72.

Later Thursday, the eurogroup of finance ministers were to hold talks in Brussels to discuss financial issues in the bloc.

Elsewhere, the U.S. was to publish official data on the trade balance as well as the weekly government report on initial jobless claims.



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