Forexpros – The euro erased gains against the pound on Thursday, after Spanish borrowing costs rose to a euro-era high at a Treasury bill auction, while French borrowing costs also rose, fanning fears over contagion to core euro zone economies.
EUR/GBP pulled back from 0.8577, the session high, to hit 0.8555 during European morning trade, slipping 0.01%.
The pair was likely to find support at 0.8517, Tuesday’s low and resistance at 0.8576, the days high.
Spain’s Treasury sold EUR3.56 billion of 10-year bonds at a yield of 6.97% in an undersubscribed auction, while France sold EUR3.33 billion of 2016 notes at a yield of 2.82% compared to 2.31% at the last auction.
Following the auction, the European Central Bank resumed purchases of Spanish government debt to support markets and ease pressure on borrowing costs.
Meanwhile, German Chancellor Angela Merkel reiterated her opposition to a greater role for the ECB in resolving the region’s debt crisis earlier, saying that only political solutions could solve the euro zone’s problems.
The pound found support after an unexpected rise in U.K. retail sales in October, as retailers offered widespread discounts in the run up to Christmas.
The Office for National Statistics said retail sales rose 0.6% last month after a 0.5% rise in September, confounding forecasts for a 0.2% decline.
On the year, sales rose 0.9%, well above expectations for a flat reading.
Elsewhere, the euro was slightly higher against the U.S. dollar, with EUR/USD easing up 0.08% to hit 1.3472.
Later in the day, the U.S. was to release official data on initial jobless claims, building permits and housing starts and a report on manufacturing activity in the Philadelphia region.
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