Forexpros — The euro erased losses against the pound on Wednesday, clawing back up from a daily low as the pound weakened on the view that the Bank of England is likely to leave interest rates on hold until well into next year.
EUR/GBP pulled back from 0.8842, the daily low, to hit 0.8865 during European morning trade, easing up 0.06%.
The pair was likely to find support at 0.8814, Tuesday’s low and a three-day low and short-term resistance at 0.8885, the high of August 10.
A report published earlier showed that consumer confidence in the U.K. fell to a four-month low in August, as the outlook for the economy over the next 12 months deteriorated.
The GfK NOP consumer confidence index fell for the third month in a row to minus 31 from minus 30 in July. Analysts had forecast a drop to minus 32, but the reading was still the lowest since April.
The outlook for the general economic situation in the next 12 months fell to minus 31 from minus 27.
Meanwhile, the euro found support after Germany’s cabinet approved a draft for legislation to grant new powers to the euro zone’s bailout fund, the European Financial Stability Facility.
Elsewhere, the euro was fractionally higher against the U.S. dollar, with EUR/USD inching up 0.01% to hit 1.4442.
Also Wednesday, preliminary data showed that consumer price inflation in the euro zone remained unchanged at a rate of 2.5% in August. A separate report showed that the unemployment rate in the single currency bloc remained unchanged at 10.0% in July.
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