Forexpros – The broadly stronger euro pushed higher against the pound on Tuesday, as risk appetite strengthened but concerns over the financial crisis in the euro zone continued to cloud the outlook for the single currency.
EUR/GBP hit 0.8369 during European morning trade, the pair’s highest since Friday; the pair subsequently consolidated at 0.8353, gaining 0.19%.
The pair was likely to find support at 0.8314, the low of December 23 and short-term resistance at 0.8388, the high of December 20.
The euro was bolstered after data showed that Chinese manufacturing activity returned to expansionary territory last month after contracting in November, easing concerns over a slowdown in the world’s second largest economy.
In the euro zone, official data released earlier showed that the number of unemployed people in Germany fell more-than-expected in December, while the country’s jobless rate dropped to a record low.
But sentiment on the euro remained fragile amid fears over the risk of sovereign debt downgrades across the shared currency zone, as investors looked ahead to bond auctions by Germany and France later in the week to gauge borrowing conditions in the region.
In the U.K., a report showed that manufacturing activity unexpectedly improved in December, but remained in contraction territory for the third consecutive month.
Markit said its manufacturing purchasing managers’ index rose to a seasonally adjusted 49.6 in December from an upwardly revised 47.7 the previous month.
Analysts had expected the manufacturing PMI to ease down to 47.3.
On the index, a reading above 50.0 indicates industry expansion, below indicates contraction.
The euro was also higher against the U.S. dollar, with EUR/GBP rising 0.67% to hit 1.3020.
Later Tuesday, the U.S. Institute of Supply Management was to publish a report on manufacturing activity, while the Federal Reserve was to publish the minutes of its December policy meeting.
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