According to Chris Turner of ING, the British pound is unlikely to see significant further gains against the euro, as rising energy prices could negatively impact UK government bonds. Short-term sterling interest rates are climbing as increasing energy costs lead markets to scale back expectations for interest rate cuts from the Bank of England. However, Turner stated that this could pose problems for the UK gilt market, where investors are already heavily invested. He mentioned that while the pound is currently benefiting from the short-term advantage of higher rates, there is a risk that an energy price shock could trigger turbulence in the bond market. In such a scenario, "UK gilts could once again act as a drag on the pound in the coming weeks." Data from London Stock Exchange Group showed the euro fell 0.2% to 0.8666 pounds, a four-week low.
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