Forexpros – The euro inched higher against the pound on Tuesday, amid guarded hopes that Wednesday’s European Union summit would result in progress on stemming the debt crisis in the euro zone and after Bank of England policymakers testified on the resumption of monetary easing.
EUR/GBP hit 0.8725 during European late morning trade, the daily high; the pair subsequently consolidated at 0.8710, inching up 0.04%.
The pair was likely to find support at 0.8668, last Friday’s low and a two-week low and resistance at 0.8766, the high of October 20.
Earlier in the day, BoE Deputy Governor Charles Bean told the U.K. parliament’s Treasury Select Committee that the central bank’s second round of monetary stimulus was likely to add half a percentage point to the U.K. inflation rate and approximately half a percentage point to growth.
The BoE voted unanimously to implement a second round of easing at its October policy meeting, amid concerns over weakening economic conditions in the U.K.
BoE Governor Mervyn King said that when it was time to tighten monetary policy the bank would start by raising the benchmark interest rate from its current record low level of 0.5%.
Risk appetite was dented by uncertainty over the outcome of Wednesday’s EU summit. Over the weekend, EU leaders moved closer to an agreement on bank recapitalization and expanding the firepower of the euro zone’s bailout fund, but divisions over restructuring Greek debt remained.
Elsewhere, the pound edged higher against the U.S. dollar, with GBP/USD rising 0.10% to hit 1.6013.
Later Tuesday, the U.S. was to publish industry data on house price inflation as well as a report on consumer confidence.
Forexpros
