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Forex: EUR/GBP gains limited at 0.8533, Cyprus eyed

FXstreet.com (Barcelona) - A surge of interest for the EUR during European time made the EUR/GBP rise above its opening price to as high as 0.8533. Some resistance at 0.8530 is provoking profit taking for the moment. Investors are fully en-gaged in the Cypriot situation as the market heads for the week close.

“In a Cypriot exit scenario, we would expect a significant uncertainty shock but not as severe as that caused by the Lehman episode, given that the economic cycle and leverage has changed markedly”, wrote Merrill Lynch analysts, estimating that such a worst-case scenario would imply a headwind to our 2013 Eurozone GDP forecast of -0.5% of between - 1% and -2.5%. “In other words, we would expect a GDP contraction for the Eurozone as a whole of between 1.5% and 3%, that is, a middle point below 2%”, they added.

UBS analysts are neutral: “There is a strong support at 0.8445 - a closing break below this would be a bearish development”, wrote analyst Gareth Berry, pointing to resistance at 0.8615 ahead of 0.8684.

Forex: EUR/JPY at gains ahead of critical hours in Cyprus

As the government of Cyprus considers the next hours critical to the country’s future, investors’ ex-pectations are pushing the euro higher ahead of the Cypriot Parliament vote during the afternoon. The EUR/JPY retraced its losses back to the opening price of 122.42 and moved 50 pips higher, to 122.92 high.
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