Forex Pros – The euro fell to a three-week low against the pound on Monday, weighed by concerns over sovereign debt contagion in the single currency bloc and speculation that senior European officials may accept a partial default of Greek debt.
EUR/GBP hit 0.8840 during European morning trade, the pair’s lowest since June 21; the pair subsequently consolidated at 0.8841, shedding 0.47%.
The pair was likely to find support at 0.8769, the low of June 17 and resistance at 0.8943, the high of June 27.
Later in the day, senior European Union officials, including European Central Bank President Jean-Claude Trichet and EU economy commissioner Olli Rehn were to meet to discuss a second bailout package for Greece and assess the risk of the sovereign debt crisis spreading from Greece to Italy.
The meeting was called after the cost of insuring Italian sovereign debt against default rose sharply on Friday amid concerns over the country’s sovereign debt load, ahead of the release of European bank stress test results later this week.
Meanwhile, speculation that officials could accept a selective Greek default continued, following a report in the Financial Times on Sunday.
The euro was trading close to a record low against the Swiss franc, with EUR/CHF tumbling 0.91% to hit 1.1820.
On Sunday, Swiss National Bank Chairman Philipp Hildebrand said price stability in Switzerland is not under threat at present, giving the central bank no reason to intervene to stem the Swiss franc’s steep gains.
“The Swiss economy is growing, unemployment is low and our country has little debt compared with other countries. We see neither deflation nor inflation risks at the moment. The national bank does not need to act,” he said.
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