Forexpros – The euro was trading close to a ten-month low against the pound on Wednesday, as Italian borrowing costs remained close to unsustainable levels following a government bond auction.
EUR/GBP hit 0.8392 during European morning trade, the pair’s lowest since February 22; the pair subsequently consolidated at 0.8406, shedding 0.18%.
The pair was likely to find support at 0.8358, the low of February 18 and resistance at 0.8459, the high of February 14.
Market sentiment has been hit in recent days by the view that last week’s European Union summit did not result in decisive plans to tackle the debt crisis in the euro zone.
Italy’s Treasury sold the full targeted amount of EUR3 billion of five-year government bonds, at an average yield of 6.47%, up from 6.29% at a similar auction last month.
Following the auction, the yield on Italian 10-year bonds climbed to 7.17%, a level widely seen as unsustainable.
Meanwhile, safe haven demand remained supported after the Federal Reserve warned that market turbulence stemming from the crisis in the euro zone posed a threat to the U.S. economy but stopped short of indicating fresh stimulus measures to shore up growth.
In the U.K., official data showed that the number of people claiming unemployment benefits rose less-than-expected in December, advancing by 3,000 after a rise of 2,500 the previous month.
Analysts had expected the number of people claiming unemployment benefits to rise by 16,100 in November.
The report also showed that the U.K. unemployment rate remained unchanged at 8.3%, despite expectations for a rise to 8.4%.
Elsewhere, sterling edged higher against the U.S. dollar with GBP/USD adding 0.08%, to hit 1.5492.
Earlier Wednesday, official data showed that industrial production in the euro zone declined unexpectedly in October, falling for the second consecutive month.
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