Forex - EUR/GBP remains lower after euro zone debt auctions

Forexpros - The euro remained slightly lower against the pound on Thursday following well received Spanish and French government debt auctions, as delays in negotiations on a debt swap deal for Greece weighed on sentiment towards the single currency.

EUR/GBP hit 0.8289 during European morning trade, the session low; the pair subsequently consolidated at 0.8308, dipping 0.05%.

The pair was likely to find support at 0.8274, the low of January 23 and resistance at 0.8342, Wednesday’s high.

Spain’s Treasury auctioned EUR4.5 billion of medium term debt at much lower yields than previously.

Investors purchased EUR2.52 billion of three-year bonds at a yield of 2.8%, down from 3.38% in January and EUR1.05 billion of five-year bonds at a yield of 3.5%, compared to 5.5% last month.

Elsewhere, France auctioned EUR8 billion of government debt in an auction which met with solid investor demand and lower yields.

But the euro remained under pressure as investors awaited an announcement on a debt restructuring deal for Greece.

Earlier this week, European officials indicated that negotiations with Greece’s private creditors on a debt writedown are almost concluded, but the second bailout and any public sector involvement must also be agreed upon before a deal can be announced.

Also Thursday, official data showed that producer price inflation in the euro zone fell in December, declining 0.2% after rising by 0.2% in November.

Year-over-year, PPI rose at a rate of 4.3% in December, in line with expectations, after advancing at a rate of 5.4% in November.

In the U.K., data showed that the construction sector expanded in January, albeit at a weaker-than-forecast pace, as growth in new orders slowed and some existing contracts were completed.

The Markit construction Purchasing Managers' Index fell to 51.4 from a reading of 53.2 in December. Economists had expected the index to ease down to 52.9 last month.

The pound was fractionally lower against the U.S. dollar, with GBP/USD dipping 0.04% to hit 1.2824.

Later in the day, Federal Reserve Chairman Ben Bernanke was to testify before the House of Representatives budget committee. The U.S. was also to produce government data on initial jobless claims.