Forexpros – The euro pared gains against the pound on Thursday, easing off the daily high after an Italian bond auction saw yields rise sharply, adding to ongoing fears that the euro zone’s debt crisis would spread to the region’s third largest economy.
EUR/GBP pulled back from 0.8830, the pair’s daily high to hit 0.8801 during European morning trade, edging 0.09% higher.
The pair was likely to find support at 0.8747, the low of July 12 and a one-month low and short-term resistance at 0.8846, Wednesday’s high.
Earlier in the day, Italy auctioned EUR1.25 billion of five-year bonds at an average yield of 4.93%, the highest since June 2008 and up significantly from 3.9% in June.
The country also sold EUR1.71 billion of 15-year bonds at a record-high yield of 5.9%, compared to 5.34% from a previous auction.
It was the first sale of longer-term debt since Italy’s 10-year yield soared to a euro-lifetime high of 6.02% on July 12.
Italy is the euro zone’s third largest economy and has the highest sovereign debt ratio relative to its economy in the single currency bloc after Greece.
The euro also pared gains against the yen, retreating from a two-day high of 112.89, to hit 112.05, still up 0.15% on the day.
Also Thursday, official data showed that consumer price inflation in the euro zone rose by a seasonally adjusted 2.7% in June, unchanged from a preliminary estimate.
Core CPI, which excludes food, energy, alcohol, and tobacco costs, rose unexpectedly, increasing by a seasonally adjusted 1.6%. Analysts had expected core CPI to remain unchanged from a preliminary reading of 1.5%.
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