Forexpros – The euro erased gains against the pound on Thursday, trading close to the previous day’s 11-month low after official data showed that the U.K. economy grew more-than-initially estimated in the third quarter.
EUR/GBP pulled back from a session high of 0.8346 during European morning trade to subsequently consolidate at 0.8322, easing down 0.02%.
The pair was likely to find short-term support at 0.8302, Wednesday’s low and an 11-month low and resistance at 0.8375, Wednesday’s high.
Trading volumes were expected to remain light ahead of the Christmas holiday weekend, as many traders have closed books before the end of the year, reducing liquidity in the market and increasing the volatility.
The U.K.’s Office for National Statistics said earlier that the country’s economy expanded 0.6% during the third quarter, up from a preliminary estimate of 0.5%. Annualized GDP rose at a rate of 0.5%, in line with expectations and unrevised from an initial estimate.
The report showed that output of the construction industries increased by 0.3%, reversing a preliminary estimate of a 0.2% decline.
Seperatly, the ONS said that the country’s current account deficit widened to GBP15.2 billion in the third quarter, the highest since records began in 1955. Economists had expected the current account deficit to stand at GBP5.5 billion.
The current account deficit for the second quarter was revised to GBP7.4 billion from a previously reported GBP2.0 billion shortfall.
Meanwhile, sentiment on the euro remained fragile as concerns persisted over the potential effects of the European Central Bank’s unprecedented EUR489.19 billion three-year loan operation on Wednesday, intended to avoid a credit crunch in the euro zone.
Markets were also hoping the move would help increase bond purchases of indebted euro zone countries. But the heavy demand from 523 European lenders underlined concerns over the scale of the financial crisis in the euro zone.
The pound was also higher against the U.S. dollar, with GBP/USD gaining 0.15% to trade at 1.5699.
Later in the day, ECB President Mario Draghi and Bank of England Governor Mervyn King were to hold a joint press conference in Frankfurt after a meeting of the European Systemic Risk Board.
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