ExchangeRates.org.uk - At the time of writing, GBP/EUR traded at around €1.1919, down roughly 0.5% from Thursday’s opening rate.On Thursday, the Pound (GBP) took another hit, weakening against most of its major trading partners.
The ongoing concerns over rising UK borrowing costs continued to dampen sentiment toward the British currency.
In the early part of the day, the yield on the 10-year UK government bond surged to its highest level since 2008, stoking fears about the country's financial stability.
Michael Brown, Senior Research Strategist at brokerage Pepperstone, commented: ‘This dynamic, of yields moving higher, as the respective currency falls, is a classic sign of fiscal de-anchoring taking place, and of participants losing confidence in the Government in question’s ability to exert control over the fiscal backdrop.We’re not at the Truss/Kwarteng stage just yet, but things are clearly on very shaky ground indeed.’
Consequently, Sterling struggled throughout the day, failing to attract much buying interest and performing poorly against nearly all of its major rivals.
The Euro (EUR) managed to hold steady against the majority of its peers on Thursday following a duo of mixed data releases.
Firstly, Germany’s latest balance of trade data exceeded expectations, with the exports-heavy country surpassing its exports forecast for November.
Following that, the Eurozone released its latest retail sales data for the same time period, which printed slightly below market expectations.
However, despite these mixed data readings, the single currency managed to stay afloat against almost all of its rivals, further bolstered by a risk-off market mood.
UK Finance Worries to Keep GBP/EUR On The Back Foot?
Looking ahead, the primary driver of movement for the Pound Euro exchange rate looking ahead to Friday will likely remain the UK’s rising borrowing costs amid a lack of any UK and Eurozone data releases.
The recent surge in the yield on the 10-year UK government bond has only exacerbated these worries, raising questions about the nation's fiscal stability and the government's ability to manage its economic challenges effectively.
Any further negative developments or statements from financial authorities could further erode confidence in the British currency at the end of this week.
This content was originally published on ExchangeRates.org.uk