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Forex - EUR/GBP hits 2-month low amid euro zone debt fears

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Forexpros - The euro tumbled to a two-month low against the pound on Tuesday, as fresh concerns over sovereign debt contagion in the euro zone weighed, while better-than-expected U.K. construction data supported the pound.

EUR/GBP hit 0.8700 during European morning trade, the pair's lowest since May 31; the pair subsequently consolidated at 0.8709, shedding 0.38%.

The pair was likely to find support at 0.8665, the low of May 31 and resistance at 0.8756, the day's high.

Fears that the debt crisis in the euro zone could spread to core economies in spite of the recent bailout deal for Greece saw Italian and Spanish bond yields advance to 14-year highs.

In the U.K., a report showed that the construction industry eased slightly less-than-expected last month.

The Markit/CIPS construction purchasing managers' index eased down to 53.5 in July from 53.6 the previous month, beating analysts' expectations of a dip to 53.2.

The report said that while commercial construction and civil engineering posted growth on the month, residential construction shrank for a second month running.

Meanwhile, the outlook for global economic growth remained clouded after data on Monday showed that the U.S. Institute for Supply Management's Manufacturing Index fell to its lowest level in two years in July.

The euro was also lower against the U.S. dollar, with EUR/USD shedding 0.51% to hit 1.4178.

Later Tuesday, the U.S. Senate was due to hold a final vote on a measure to raise the U.S. debt ceiling by at least USD2.1 trillion and cut federal spending by as much as USD2.4 trillion.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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