Pound to Euro Exchange Rate Slumps as ECB Raises Rates and UK Bond Yields Surge

The British Pound to Euro exchange rate remained under pressure on Thursday as investors digested another surge in UK bond yields and the European Central Bank's latest interest-rate increase. The GBP/EUR continued to trade close to recent lows around the 1.1630-1.1650 area, with Sterling struggling to make sustained headway against a firm Euro.

ING expects gradual GBP/EUR losses and has a six-month forecast of 1.1240. Risk conditions remained fragile as bond yields moved higher again and energy prices continued to rise.

Brent crude climbed above $105 per barrel, while European natural gas prices remained close to three-year highs, intensifying concerns over the inflation outlook and the threat of weaker growth.