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Forex - EUR/GBP near 4-week high as ECB rate hike view supports

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Forex Pros - The euro was trading close to a four-week high against the pound on Monday, supported by expectations of a European Central Bank rate increase and a fresh Greek bailout deal.

EUR/GBP hit 0.8924 during European morning trade, the daily high; the pair subsequently consolidated at 0.8913, easing up 0.04%.

The pair was likely to find support at 0.8844, Friday's low and resistance at 0.9006, the high of May 3.

The Bank of England is to hold a policy setting meeting later in the week and a slew of weaker-than-expected data last week reinforced the view that a sluggish recovery will drive them to keep U.K. interest rates low for some months to come.

In contrast, the ECB is to hold its rate-setting meeting on Thursday, where it is widely expected to signal a July interest-rate hike. The bank bumped up its key interest rate to 1.25% from 1% in April amid rising consumer prices.

Earlier Monday, official data showed that euro zone producer prices rose slightly more-than-expected in April, up 0.9% after a rise of 0.8% in March, indicating continuing upward pressure on consumer prices.

Meanwhile, the euro was almost unchanged against the U.S. dollar, with EUR/USD dipping 0.01% to hit 1.4632.

Also Monday, U.K. Chancellor George Osborne was forced to defend his deficit-cutting plan after a group of economists said the pace of cutbacks was putting the U.K.'s economic recovery at risk.

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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.


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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