Forexpros – The broadly weaker euro was down against the pound on Monday, trading close to an eight-month low as investors remained uncertain over the progress made at Friday’s European Union summit.
EUR/GBP hit 0.8492 during European morning trade, the pair’s lowest since Thursday; the pair subsequently consolidated at 0.8498, shedding 0.50%.
The pair was likely to find support at 0.8484, the low of November 11 and an eight-month low and resistance at 0.8553, the session high.
EU leaders agreed Friday to implement stricter budgetary rules across the euro zone and to provide EUR200 billion in loans to the International Monetary Fund to assist countries with debt problems.
But U.K. Prime Minister David Cameron vetoed EU treaty changes aimed at tightening fiscal rules after failing to secure concessions relating to London’s financial services industry.
Investors remained jittery after the European Central Bank indicated that it had no plans to increase its bond purchasing program, capping its weekly bond purchases at EUR20 billion.
Meanwhile, speculation over a possible downgrade of the euro zone’s sovereign debt by Standard & Poor’s continued after the ratings agency placed the credit ratings of 15 euro zone members on negative watch last week and said it would announce any ratings changes “as soon as possible” after the summit.
Earlier in the day, Italy’s Treasury sold the full targeted amount of EUR7 billion of 12-month government bonds at an average yield of 5.95% compared to 6.08% at a previous bond auction last month.
Following the auction, the yield on Italian 10-year government bonds climbed back towards the near unsustainable levels hit last month, rising to 6.93%.
The euro was also down against the U.S. dollar, with EUR/USD tumbling 0.88% to hit 1.3266.
Also Monday, ratings agency Moody’s warned that the debt crisis in the euro zone was still in a “critical” and “volatile” stage, adding that the region still faced increasing risks to cohesion.
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