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Forex - EUR/GBP hits 6-day high after EU summit deal

Published 10/27/2011, 06:39 AM
Updated 10/27/2011, 06:39 AM

Investing.com – The euro was higher against the pound on Thursday, trading close to a six-day high after European Union leaders reached an agreement with banks to accept a writedown on Greek debt and scale up the euro zone’s bailout fund.

EUR/GBP hit 0.8768 during European late morning trade, the pair’s highest since October 19; the pair subsequently consolidated at 0.8759, gaining 0.64%.

The pair was likely to find support at 0.8688, the days low and resistance at 0.8796, the high of October 17 and a five-week high.

The euro strengthened broadly after European leaders and banks reached a deal on a 50% writedown for private bondholders on their Greek debt, which will reduce Greece’s debt burden from 160% of GDP to 120% by 2020.

Leaders also agreed to expand the firepower of the euro zone's bailout fund, the European Financial Stability Facility, but the final details on how to enlarge the fund were not expected to be agreed until November.

The pound remained under pressure after the Bank of England implemented a second round of monetary easing earlier this month, amid concerns over weakening economic conditions in the U.K.

The euro was also higher against the U.S. dollar, with EUR/USD surging 0.78% to hit 1.4013.

Earlier Thursday, the Confederation of British Industry said the decline in retail sales moderated in October and retailers expected to see “modest growth” next month, in the build-up to Christmas.

The CBI’s sales balance index rose to minus 11 from the previous month’s reading of minus 15. Analysts had expected the index to remain unchanged.

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