Forex - EUR/GBP higher after Italian bond auction

Published 08/30/2012, 06:16 AM
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Investing.com - The euro was higher against the pound on Thursday, after Italy saw borrowing costs ease at an auction of five- and ten-year government bonds and as investors awaited a speech by Federal Reserve Chairman Ben Bernanke on Friday.

EUR/GBP hit 0.7936 during European morning trade, the session high; the pair subsequently consolidated at 0.7923, gaining 0.13%.

The pair was likely to find support at 0.7904, Wednesday’s low and near-term resistance at 0.7945, Wednesday’s high.

Italy’s Treasury auctioned EUR4 billion of 10-year bonds at an average yield of 5.82%, down from 5.96% last month and the lowest level since March.

Italy also sold EUR2.5 billion of five-year bonds at an average yield of 4.73%, down from 5.29% last month, also the lowest rate since March.
The successful auction reflected growing expectations that the European Central Bank is working on measures to help stabilize the euro zone's sovereign debt markets ahead of its upcoming policy meeting on September 6.

Meanwhile, investors remained cautious ahead of Bernanke’s speech at a symposium in Jackson Hole, Wyoming, amid ongoing speculation over how close the Fed may be to implementing more economic stimulus measures.

In the U.K., official data showed that net lending to individuals increased by GBP0.9 billion in July, below expectations for a GBP1.1 billion increase.

A separate report showed that U.K. mortgage approvals rose to 47,000 in July, in line with expectations, coming off June’s 18-month low of 44,000.

The euro was fractionally higher against the U.S. dollar, with EUR/USD inching up 0.10% to 1.2541 and was little changed against the yen, with EUR/JPY dipping 0.02% to 98.60.

Later in the day, the U.S. was to release official data on personal income as well as a weekly report on jobless claims.

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