Forex Pros – The euro fell to a one-week low against the pound on Monday, ahead of peripheral euro zone bond auctions and amid reports that the future of ailing German lender WestLB was hanging in the balance.
EUR/GBP hit 0.8403, the pair’s lowest since February 7, during European morning trade; the pair subsequently consolidated at 0.8417, shedding 0.56%.
The pair was likely to find support at 0.8376, the low of January 19 and resistance at 0.8476, last Friday’s high.
Over the weekend, talks to come up with a rescue deal for WestLB stalled as they entered the final stretch to present a restructuring plan to the European Commission.
Meanwhile, later in the day, Italy was set to auction ultra-long bonds maturing in November 2015 and September 2040. Elsewhere, Portugal was to offer EUR750 million to EUR1 billion in 12-month Treasury bills on Wednesday.
Speculation that Portugal would have to follow Ireland in seeking a bailout mounted last week after yields on 10-year Portuguese debt climbed above 7%, the threshold analysts consider for whether euro zone nations can handle debt repayments.
The euro was also down against the U.S. dollar, with EUR/USD shedding 0.6% to hit 1.3466.
Later Monday, European finance ministers were meeting to discuss strengthening the regions EUR440 billion rescue fund. However, Germany remained reluctant to bolster the facility without euro zone commitments on closer economic coordination.
ForexPros.com
