Forexpros – The euro extended losses against the pound on Tuesday, falling to a one-week low after a report showed that the ZEW index of German economic sentiment fell to its lowest level since November 2008.
EUR/GBP hit 0.8691 during European morning trade, the pair’s lowest since October 11; the pair subsequently consolidated at 0.8699, shedding 0.30%.
The pair was likely to find support at 0.8651, the low of September 26 and resistance at 0.8764, the high of October 11.
The ZEW Centre for Economic Research said that its index of German economic sentiment fell to minus 48.3 October from a reading of minus 43.3 in September. It was the eight consecutive monthly decline in the index and added to fears over a recession in the euro zone’s largest economy.
Analysts had expected the index to decline to minus 45.0 in October.
The report came a day after hopes for a comprehensive solution to the euro zone’s financial woes were quashed after Germany’s finance minister said the October 23 European Union summit would not provide a “definitive solution” to the region’s debt crisis.
Earlier Tuesday, official data showing that the rate of inflation in the U.K. hit a three-year high in September adding to concerns over slowing economic growth.
The U.K. Office for National Statistics said consumer price inflation rose 0.6% last month, taking the annual inflation rate to 5.2%, matching the record high hit in September 2008. Analysts had expected the annual rate to jump to 4.9%.
The data fuelled concerns that the U.K. economy will undergo a prolonged period of high inflation and lower growth after the Bank of England announced a second round of quantitative easing to shore up the economy earlier this month.
The euro was also down against the U.S. dollar, with EUR/USD shedding 0.37% to hit 1.3685.
Later in the day, the U.S. was to release a government report on producer price inflation, while Federal Reserve Chairman Ben Bernanke was due to speak in Boston.
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