Pound Under Pressure as ECB Decision Looms Large

The Pound to Euro exchange rate remained largely unchanged after the European Central Bank's latest policy decision.

The ECB left interest rates at 2.25%, with President Christine Lagarde warning that rising energy prices could keep inflation above target into the first half of 2027, pointing towards further monetary tightening in the second half of 2026.

Meanwhile, UK government borrowing costs continued to rise, with the yield on 10-year gilts reaching its highest level in over two months at 5.08%.

The Pound was under pressure due to these rising yields and concerns about Prime Minister Andy Burnham's recent policy announcements, which have been welcomed politically but are causing bond investors to worry about how they will be financed without breaching Labour's fiscal rules.