Forex - EUR/GBP hits 2-week low after weak German Ifo

Published 09/24/2012, 06:36 AM
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Investing.com - The euro fell to a two-week low against the pound on Monday, as weaker-than-expected German business confidence data and uncertainty over whether Spain will request a full-scale bailout weighed on demand for the single currency.

EUR/GBP hit 0.7955 during European morning trade, the pair’s lowest since September 7; the pair subsequently consolidated at 0.7963, shedding 0.43%.

The pair was likely to find support at 0.7924, the low of September 7 and resistance at 0.7995, the session high.

The euro weakened against sterling following a report showing that Germany’s Ifo business confidence index deteriorated to the lowest level since March 2010 this month, amid ongoing concerns over euro zone’s debt crisis.

The German Ifo index fell to 101.4 from 102.3 in August, the fifth monthly decline in a row, compared to expectations for a reading of 102.5.

Meanwhile, uncertainty over whether Spain will request a full scale sovereign bailout weighed.

On Thursday Madrid is to present its draft budget for next year and announce structural reforms, while the results of bank stress tests are due on Friday. In addition, ratings agency Moody’s is expected to complete a ratings review on Spain later this week.

Over the weekend, Spain’s economy minister said the country would not rush to seek external financial aid, as pressure mounted on Spain to seek a bailout.

The euro was also down against the U.S. dollar and the yen, with EUR/USD falling 0.54% to 1.2909 and EUR/JPY dropping 0.69% to 100.73.

Meanwhile, concerns over Greece persisted as Athens prepared to present a package of spending cuts demand by international lenders to euro zone officials at the end of this week, amid fears that the country’s budget shortfall could be larger than expected.


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