Forexpros – The euro fell against the pound on Monday, trading at the lowest level since November 2008 after the yield on Spain’s 10-year government bond shot above the key 7%-level, underlining concerns over the region’s ongoing debt crisis.
EUR/GBP hit 0.7920 during European morning trade, the session low and the lowest since November 3, 2008; the pair subsequently consolidated at 0.7931, dipping 0.05%.
The pair was expected to find near-term support at 0.7840, the low from November 8, 2008 and resistance at 0.7983, the high from July 6.
Market were eyeing a meeting of euro zone finance ministers in Brussels later in the day to discuss a plan announced last month to help the region’s indebted nations and banking systems.
Investors continued to monitor rising bond yields for peripheral euro zone nations, amid sustained fears over the region’s debt crisis.
Spanish 10-year yields rose above the psychologically important 7% in early European trade, hitting a high of 7.1%. Similar-maturity Italian yields increased to 6.15%.
Sentiment on the euro remained fragile after data showed that investor confidence in the euro zone for July deteriorated to the lowest level since July 2009, remaining in negative territory for the 12th consecutive month.
Sentix research group said its index of investor confidence declined to minus 29.6 in July from June’s reading of minus 28.9.
The outlook for the pound remained clouded as well, after the Bank of England said last week that “the weaker outlook for U.K. output growth means that the margin of economic slack is likely to be greater and more persistent.”
The comments came after BoE policymakers voted to increase its quantitative easing program by GBP50 billion to GBP375 billion, in order to shield the recession hit U.K. economy from the ongoing debt crisis in the euro zone.
The bank also left the benchmark interest rate unchanged at 0.5%, where it’s stood since March 2009, in a widely expected move.
Elsewhere, the euro was also lower against the U.S. dollar and the yen, with EUR/USD slipping 0.05% to hit 1.2281 and EUR/JPY down 0.1% to 97.77.
Later in the session, European Central Bank President Mario Draghi was to testify before the European Parliament, in Brussels.
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