Forexpros – The euro was trading close to a three-and-a-half year low against the pound on Monday, as concerns over a political impasse in Greece fuelled fears that the country may be forced to exit the euro zone.
EUR/GBP hit 0.8006 during European morning trade, the session low; the pair subsequently consolidated at 0.8012, shedding 0.31%.
The pair was likely to find short-term support at 0.7995, Friday’s low and the pair’s lowest since early November 2008 and resistance at 0.8029, the session high.
On Sunday, Alexis Tsipras, the head of Greece’s largest anti-bailout party Syriza, rejected calls to join a coalition government, fuelling fears that a fresh round of elections is becoming inevitable and casting the country’s ability to uphold its fiscal commitments into doubt.
Meanwhile, an auction of Spanish government bonds saw the country’s short-term borrowing costs rise.
Spain sold EUR2.9 billion of 12 and 18-month bonds, slightly below its maximum target of EUR3 billion. The yield on the 12-month bonds rose to 2.98%, from 2.62% previously, while the yield on the 18-month bonds increased to 3.3%, from 3.11%.
Adding to the bearish sentiment, official data showed that industrial production in the euro zone fell unexpectedly in March, adding to fears over the health of the region’s economy.
Eurostat, the European statistics agency said industrial production dipped by a seasonally adjusted 0.3% in March, defying expectations for a 0.4% increase.
The euro was also lower against the U.S. dollar and the yen, with EUR/USD shedding 0.33% to hit 1.2874 and EUR/JPY slipping 0.20% to hit 103.05.
Later in the day, European Union finance ministers were to hold talks in Brussels.
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