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Forex - EUR/GBP gains capped as euro ministers meet on Ireland

Published 11/16/2010, 07:55 AM
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Investing.com – The euro was up against the pound on Tuesday, rising to a fresh daily high but gains were capped ahead of the conclusion of a key meeting of European Union financial leaders in Brussels.

EUR/GBP hit 0.8512 during European afternoon trade, a daily high; the pair subsequently consolidated at 0.8510, gaining 0.54%.

The pair was likely to find support at 0.8452, Monday’s low and resistance at 0.8551, the high of November 11.

Euro zone finance ministers were meeting to find a way to end Ireland's debt crisis, with Dublin resisting pressure to seek a state bailout, saying that only its banks needed help.

Ireland has come under increasing pressure from euro zone counterparts to take funds from the European Financial Stability Facility amid signs that market contagion is spreading to Portugal and could infect bigger states.

The Irish government has denied that a state rescue is needed to stop its problems spreading into other euro zone nations.

Earlier in the day, data showed that the ZEW index of German consumer sentiment unexpectedly jumped in November, rising to 1.8 from -7.2 in October. That was in excess of an expected increase to -5.9.

The euro was also up against the U.S. dollar, with EUR/USD gaining 0.25% to hit 1.3621.

Also Tuesday, official data showed that U.K. consumer price inflation soared to a 4-month high in October, forcing the Bank of England to explain why CPI remained above target.

Following the report Bank of England Governor Mervyn King said inflation will remain “elevated” throughout 2011.

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