Forex Pros – The euro pared losses against the pound on Tuesday, pulling away from an almost one-month low but the shared currency remained under selling pressure after Holland’s finance minister said the possibility of a selective Greek default could no longer be excluded.
EUR/GBP pulled away from 0.8747, the pair’s lowest since June 16 to hit 0.8797 during European morning trade, still down 0.25% on the day.
The pair was likely to find support at 0.8723, the low of June 16 and a two-week low and resistance at 0.8891, Monday’s high.
Earlier in the day, Dutch Finance Minister Jan Kees de Jager said the possibility of a partial default by Greece in order to put the country’s debt on a more sustainable footing could no longer be ruled out, despite the European Central Bank’s opposition to such a move.
On Monday, European ministers reaffirmed their “absolute commitment” to safeguarding financial stability in the euro zone and said new measures to deal with the region’s debt crisis would be announced “shortly”, but set no deadline.
Meanwhile, the cost of insuring Spanish, Portuguese and Greek sovereign debt against default surged to euro-lifetime highs, while 10-year Italian bond yields rose to more than 6% for the first time since the inception of the single currency.
The euro also trimmed losses against the U.S. dollar, with EUR/USD clawing back up from 1.3838 to trade at 1.3943, still down 0.62% on the day.
Also Tuesday, official data showed that consumer price inflation in the U.K. declined unexpectedly in June, the first decline in the index in the month of June since 2003.
The Office for National Statistics said consumer prices fell 0.1% last month, taking the annual inflation rate to 4.2%.
Forexpros
