Forexpros — The euro erased losses against the pound on Tuesday, pulling back from the daily low as sentiment was boosted by a rebound in equities after sharp falls on Monday.
EUR/GBP pulled away from 0.8757, the daily low, to hit 0.8795 during European morning trade, easing up 0.07%.
The pair was likely to find support at 0.8702, Monday’s low and a five-week low and resistance at 0.8836, the high of July 13.
Concerns over sovereign debt contagion to Italy and Spain from Greece escalated on Monday, as Italian and Spanish 10-year bond yields climbed higher and their spreads over benchmark German bonds rose to euro-lifetime highs.
Investors remained cautious ahead of a meeting of euro zone leaders in Brussels later in the week to discuss a second bailout for Greece and the overall financial stability of the single currency bloc.
The euro was also up against the U.S. dollar, with EUR/USD rising 0.44% to hit 1.4171.
Also Tuesday, a report by the ZEW Centre for Economic Research said that its index of German economic sentiment fell more-than-expected in July, dropping for the fifth consecutive month, as concerns over sovereign debt in the euro zone and the U.S. weighed.
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