Forexpros – The euro rose to a one-month high against the broadly weaker pound on Monday, but gains were limited amid concerns over how effective steps by the European Central Bank to tackle the debt crisis in the euro zone can be.
EUR/GBP hit 0.7946 during European morning trade, the pair’s highest since July 9; the pair subsequently consolidated at 0.7942, gaining 0.30%.
The pair was likely to find near-term support at 0.7916, the session low and resistance at 0.7983, the high of July 6.
The pound came under pressure amid concerns that the Bank of England will cut its forecast for growth in Wednesday’s quarterly inflation report, increasing the likelihood for further easing measures from the central bank.
Earlier Monday, a report by mortgage lender Halifax showed that U.K. house prices fell by 0.6% in July, slightly more than expectations for a 0.5% decline, indicating that the pattern of broadly stable house prices is remaining unchanged.
The euro remained supported after the European Central Bank indicated Thursday that it may restart its bond buying program, to help lower Spanish and Italian borrowing costs.
But investors remained wary amid concerns over how effective the ECB’s new bond buying program would be, in the light of differences from the bank’s existing scheme.
ECB President Mario Draghi also said that any steps by the bank were conditional on euro zone governments experiencing difficulty on bond markets activating the bloc’s bailout funds to purchase government bonds and accepting strict conditions and supervision.
Investor sentiment was also hit by renewed concerns that Spain may require a full scale bailout after the country’s Prime Minister Mariano Rajoy indicated last week that Madrid may ask for European Financial Stability Facility aid.
The pound was down against the U.S. dollar, with GBP/USD down 0.49% to 1.5565.
Later in the day, Federal Reserve Chairman Ben Bernanke was to speak; his comments would be closely watched amid ongoing speculation over further monetary stimulus after data on Friday showed that the U.S. unemployment rate unexpectedly ticked up to 8.3% in July, from 8.2% in the preceding month.
The U.S. economy added 163,000 jobs in July, the biggest increase since February and outstripping expectations for an increase of 100,000.
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