Forexpros – The euro rallied against the pound on Monday, after French and German leaders pledged a package of new initiatives to counter the effects of the ongoing debt crisis in the euro zone.
EUR/GBP hit 0.8685 during European late morning trade, the daily high; the pair subsequently consolidated at 0.8682, jumping 0.98%.
The pair was likely to find support at 0.8589, Friday’s low and resistance at 0.8733, the high of October 6 and a six-day high.
Speaking after talks in Berlin on Sunday, German Chancellor Angela Merkel and French President Nicolas Sarkozy said that they will present a “comprehensive” package of new measures to tackle the debt crisis in the euro zone.
The measures are believed to include plans to recapitalize European banks and find a resolution to Greece’s debt crisis, as well as proposals to coordinate budget policies between euro zone member states.
The pound continued to remain supported in the wake of last week’s decision by the Bank of England to restart its asset purchase program in order to stimulate the faltering U.K. economy.
The euro was also sharply higher against the U.S. dollar, with EUR/USD jumping 1.6% to hit 1.3591.
Also Monday, troubled Franco-Belgian lender Dexia agreed to the nationalization of its Belgian banking division, following fears that it could go bankrupt.
Ratings agency Moody’s has warned that the burden of the bailout of the bank could lead to a ratings cut on Belgian sovereign debt.
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