Investing.com - The euro fell to a fresh three-and-a-half year low against the pound on Monday, as sustained concerns over Spain and Italy’s finances weighed on the shared currency and bolstered safe haven demand for sterling.
EUR/GBP hit 0.7850 during European morning trade, the pair’s lowest since early November 2008; the pair subsequently consolidated at 0.7851, down 0.17%.
The pair was likely to find support at 0.7736 and near-term resistance at 0.7875, the session high.
The euro came under pressure amid uncertainty over whether some bondholders could forced to accept losses under the terms of Spain's bank bailout.
The yield on Spanish 10-year bonds rose to 6.7%, re-approaching the critical 7% threshold, widely seen as unsustainable in the long run. The yield on Italian 10-year bonds ticked up to 6.05%.
Meanwhile, Germany’s constitutional court announced that it will deliver a ruling on whether the euro zone’s permanent bailout fund contravenes the German constitution on September 12, disappointing hopes for an earlier decision.
Sterling remained supported after the Bank of England announced a new GBP80 billion 'funding for lending' program on Friday, which will offer cheaper loans to households and businesses.
Elsewhere, investors were looking ahead to Federal Reserve Chairman Ben Bernanke's testimony on the economic outlook to the U.S. Senate on Tuesday and Wednesday, amid ongoing speculation over whether the central bank will introduce more easing measures to stimulate the economy.
The euro fell to a six-week low against the yen, with EUR/JPY down 0.72% to 96.28 and weakened against the U.S. dollar, with EUR/USD shedding 0.50% to trade at 1.2187.
Also Monday, official data showed that consumer price inflation in the euro zone held steady at 2.4% in June, unchanged from the previous month and in line with market expectations.
Month-on-month, CPI declined 0.1%, compared to expectations for a flat reading, after falling 0.1% in May.
EUR/GBP hit 0.7850 during European morning trade, the pair’s lowest since early November 2008; the pair subsequently consolidated at 0.7851, down 0.17%.
The pair was likely to find support at 0.7736 and near-term resistance at 0.7875, the session high.
The euro came under pressure amid uncertainty over whether some bondholders could forced to accept losses under the terms of Spain's bank bailout.
The yield on Spanish 10-year bonds rose to 6.7%, re-approaching the critical 7% threshold, widely seen as unsustainable in the long run. The yield on Italian 10-year bonds ticked up to 6.05%.
Meanwhile, Germany’s constitutional court announced that it will deliver a ruling on whether the euro zone’s permanent bailout fund contravenes the German constitution on September 12, disappointing hopes for an earlier decision.
Sterling remained supported after the Bank of England announced a new GBP80 billion 'funding for lending' program on Friday, which will offer cheaper loans to households and businesses.
Elsewhere, investors were looking ahead to Federal Reserve Chairman Ben Bernanke's testimony on the economic outlook to the U.S. Senate on Tuesday and Wednesday, amid ongoing speculation over whether the central bank will introduce more easing measures to stimulate the economy.
The euro fell to a six-week low against the yen, with EUR/JPY down 0.72% to 96.28 and weakened against the U.S. dollar, with EUR/USD shedding 0.50% to trade at 1.2187.
Also Monday, official data showed that consumer price inflation in the euro zone held steady at 2.4% in June, unchanged from the previous month and in line with market expectations.
Month-on-month, CPI declined 0.1%, compared to expectations for a flat reading, after falling 0.1% in May.