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Forex - EUR/GBP hits 2-month low as Spanish borrowing costs rise

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Forexpros - The euro slid to a two-month low against the pound on Thursday, as the yields on Spanish 10-year bonds neared the 7% threshold that heralded the bailouts of Greece, Portugal and Ireland.

EUR/GBP hit 0.8685 during European morning trade, the pair's lowest since May 31; the pair subsequently consolidated at 0.8697, shedding 0.23%.

The pair was likely to find support at 0.8654, the low of May 29 and resistance at 0.8749, the days high.

Earlier in the day, Spain's Treasury auctioned EUR3.3 billion of bonds at higher interest rates than at an auction last month. Following the auction, the yield on Spanish 10-year bonds climbed to 6.07%.

On Wednesday, the cost of insuring Spanish debt against default surged to a euro-lifetime high for the second consecutive day, amid fears that a slowdown in global growth could hamper government efforts to restore financial order in the country.

The euro was also pressured lower as the dollar gained broadly after Japanese authorities intervened in the foreign exchange market to curb the yen's sharp gains and support its mainly export-led economy.

The euro was also lower against the U.S. dollar, with EUR/GBP tumbling 0.76% to hit 1.4214.

Later Thursday, both the Bank of England and the European Central Bank were to announce their benchmark interest rates, while the U.S. was to publish government data on initial jobless claims.

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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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