GBP/EUR Exchange Rate Holds Steady Despite Record Debt-Interest Costs

The British Pound to Euro exchange rate (GBP/EUR) has held above 1.1650 despite concerns over a record August debt-interest cost and a larger-than-expected UK borrowing deficit.

The combination of diminishing fiscal headroom and excessive Bank of England rate-hike pricing makes the Pound vulnerable in the coming weeks, according to ING.

Pound Sterling has shown resilience but faces challenges ahead of next month's Budget. Higher than expected borrowing data hindered Sterling, despite a dip in energy prices.

ING still expects a GBP/EUR retreat to 1.15 over the next few weeks due to fiscal and monetary grounds.