Investing.com - The euro rallied to a five-day high against the pound on Wednesday, after data showed that the U.K. slipped back into a recession in the first quarter, while investors remained focused on developments in the euro zone.
EUR/GBP hit 0.8210 during European morning trade, the pair’s highest since April 18; the pair subsequently consolidated at 0.8217, climbing 0.53%.
The pair was likely to find support at 0.8161, the low of April 19 and resistance at 0.8244, the high of April 18.
The pound came under broad pressure after preliminary official data showed that the U.K. economy contracted unexpectedly in the first three months of 2012, shrinking for the second consecutive quarter.
The Office for National Statistics said gross domestic product declined by a seasonally adjusted 0.2% in the first quarter, defying expectations for a modest 0.1% expansion.
The U.K.’s economy shrank by 0.3% in the final three months of 2011, downwardly revised from contraction of 0.2%.
Following the release of the data, U.K. Chancellor George Osborne said the economic situation is very difficult but warned that abandoning the government’s deficit reduction plan would make the situation even worse.
Meanwhile, European Central Bank President Mario Draghi said that the central bank is confident the wider economy will eventually benefit from its long term refinancing operations.
Speaking before the European Parliament's Economic and Monetary Committee, in Brussels, he gave no indication, however, on whether the ECB will provide further support to banks or governments.
The comments came amid speculation that the Netherlands could lose its triple-A credit rating following the collapse of its government on Monday after talks on the 2013 austerity budget failed.
Elsewhere, sterling was also lower against the U.S. dollar with GBP/USD shedding 0.32%, to hit 1.6089.
Later in the day, the U.K. was to release a report on industrial order expectations, while the U.S. was to publish government data on durable goods orders. In addition, the Federal Reserve was to announce its benchmark interest rate and release its rate statement.
EUR/GBP hit 0.8210 during European morning trade, the pair’s highest since April 18; the pair subsequently consolidated at 0.8217, climbing 0.53%.
The pair was likely to find support at 0.8161, the low of April 19 and resistance at 0.8244, the high of April 18.
The pound came under broad pressure after preliminary official data showed that the U.K. economy contracted unexpectedly in the first three months of 2012, shrinking for the second consecutive quarter.
The Office for National Statistics said gross domestic product declined by a seasonally adjusted 0.2% in the first quarter, defying expectations for a modest 0.1% expansion.
The U.K.’s economy shrank by 0.3% in the final three months of 2011, downwardly revised from contraction of 0.2%.
Following the release of the data, U.K. Chancellor George Osborne said the economic situation is very difficult but warned that abandoning the government’s deficit reduction plan would make the situation even worse.
Meanwhile, European Central Bank President Mario Draghi said that the central bank is confident the wider economy will eventually benefit from its long term refinancing operations.
Speaking before the European Parliament's Economic and Monetary Committee, in Brussels, he gave no indication, however, on whether the ECB will provide further support to banks or governments.
The comments came amid speculation that the Netherlands could lose its triple-A credit rating following the collapse of its government on Monday after talks on the 2013 austerity budget failed.
Elsewhere, sterling was also lower against the U.S. dollar with GBP/USD shedding 0.32%, to hit 1.6089.
Later in the day, the U.K. was to release a report on industrial order expectations, while the U.S. was to publish government data on durable goods orders. In addition, the Federal Reserve was to announce its benchmark interest rate and release its rate statement.