Forexpros – The euro weakened against the pound on Friday as investors acted on growing sentiment that U.K. government debt can serve as a safe-haven play for those looking for shelter from the European crisis.
EUR/GBP hit .8249 in U.S. trading on Friday, down 0.05% and up from a session low of .8239 and off from a high of .8266.
The pair was likely to find support at .8239, Friday’s earlier low, and resistance at .8348, Wednesday’s high.
In Europe, banks continue to deposit money in the European Central Bank’s overnight deposit accounts instead of making it available for lending, priming fears that the continent remains stuck in a credit crunch.
Furthermore out of Germany, factory orders came in lower than expected, declining 4.8% in November and worse than market expectations for a 1.6% contraction.
In the U.S., the economy added a net 200,000 non-farm jobs, well above an expected 150,000.
The U.S. unemployment news dampened demand for the euro while fueling a drive for both the dollar and the pound, the latter of which viewed as somewhat of a safe haven.
“The pound is underpinned by demand for sterling assets while the euro region is still a trouble spot,” said Geoffrey Yu, a currency strategist at UBS in London, according to Bloomberg.
“The benefit of the pound is that the U.K. is not in the euro zone.”
U.K. gilts have seen demand rise as well.
“Perhaps there is realization in the market that the euro debt problem isn’t going to go away any time soon despite improvement in the U.S. economy,” said Marchel Alexandrovich, a senior European economist at Jefferies International, one of 21 gilt primary dealers, Bloomberg added.
“Europe is a trouble spot and gilts are a haven asset.”
Meanwhile, the euro was lower against the dollar and the yen, with EUR/USD falling 0.49% to hit 1.2729 and EUR/JPY falling 0.62% to hit 98.01.
On Sunday, the Royal Institution of Chartered Surveyors will report the latest changes in U.K. housing prices, while on Monday, U.K. industrial production figures will publish.
Also on Monday, U.S. consumer credit figures will come out, while in Europe traders will keep an eye on Swiss unemployment rates and French consumer spending figures.
Also on Monday, Chinese economic growth, inflation and trade balance figures will publish.
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