Forexpros – The euro trimmed gains against the pound on Monday, after Italy paid a record yield at an auction of five-year bonds, in the first Italian debt auction since former European Commissioner Mario Monti was appointed as prime minister.
EUR/GBP pulled back from 0.8601, the pair’s highest since November 7, to hit 0.8579 during European morning trade, still up 0.23% on the day.
The pair was likely to find support at 0.8528, Friday’s low and resistance at 0.8623, the high of November 1.
Italy’s Treasury raised the maximum targeted amount of EUR3 billion at the sale, but yields rose to a euro-era high of 6.29%, up from 5.32% at a similar auction a month ago.
Last week, the yield on Italian 10-year bonds climbed above the 7% threshold which precipitated bailouts in Greece, Ireland and Portugal, before falling back.
Over the weekend, Italy’s President Giorgio Napolitano appointed Mario Monti to lead a new government as the country attempts to implement austerity measures and restore investor confidence in its economy.
Earlier Monday, official data showed that industrial output in the euro zone fell at the fastest pace in two-and-a-half years in September, dropping 2%, slightly less than expectations for a 2.2% decline, but erasing all of the previous month’s 1.4% gain.
The weak data underlined concerns over the threat of an economic downturn in the single currency bloc.
Meanwhile, the euro was lower against the U.S. dollar, with EUR/USD shedding 0.45% to hit 1.3688.
Also Monday, Greece’s finance minister said his priority was to ensure the country receives its sixth tranche of bailout funds after Prime Minister Lucas Papademos was sworn in over the weekend.
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