Pound-Euro Falls as UK Gilt Yields Hit 19-Year High

The Pound-Euro exchange rate fell to a near two-week low on Wednesday as rising UK government bond yields put pressure on Sterling. At the time of writing, GBP/EUR was trading at €1.1648, its lowest level in 13 days.

Rising government borrowing costs continued to weigh on the currency, with British gilt yields climbing to their highest level since August 2007. This move fueled concerns that elevated borrowing costs could put further pressure on the UK economy and leave the British government facing tighter fiscal conditions.

The Pound struggled on Wednesday due to a quiet UK data calendar offering Sterling little support. The global risk-off market mood also dampened demand for the increasingly risk-sensitive Pound, while the Euro found some support against it as investors moved towards safer assets.