British Pound: Euro weakness drives Sterling gains - MUFG

FXStreet Insights Team FXStreet

Lee Hardman at MUFG highlights that the Pound has rallied sharply against the Euro as Euro-zone fiscal concerns intensify, driving EUR/GBP to fresh year-to-date lows. While UK fiscal risks are present, they are seen as less acute than in France, and expectations for a Bank of England rate hike in November help to limit downside risks for the Pound.

EUR/GBP hits fresh year-to-date low as fiscal concerns mount

"Negative development in the euro-zone have boosted the relative appeal of the pound."

"The pound has strengthened sharply against the euro since the end of last month as the euro sell-off has broadened out."

"It has resulted in EUR/GBP falling from just above the 0.8600 to a fresh year-to-date low yesterday of 0.8448."

"Media reports have suggested that the Labour government is well aware of challenging global bond market conditions ahead of this month’s budget scheduled for 28th October which is encouraging them to play it safe as they seek to limit the risk of negative market reaction."

"A development that would help to ease downside risks for the pound."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

AUD/USD consolidates above 0.6950 amid risk aversion

AUD/USD consolidates in the Asian session on Thursday, trading just above 0.6950 as traders assess developments in the Middle East crisis. The Pentagon reportedly ordered readiness for potential strikes against Iran. This keeps the geopolitical risk premium in play, which, along with hawkish FOMC Minutes and elevated US bond yields, will likely keep the US Dollar underpinned at the expense of the pair.

USD/JPY slips below 158.00 as USD retreats

USD/JPY returns to the red below 158.00 in the Asian session on Thursday amid speculation that authorities will step in to prop up the Japanese Yen. Meanwhile, the US Dollar eases from near an 18-month high on profit taking, ignoring Wednesday's hawkish FOMC Minutes and the risk of a further escalation of tensions in the Middle East, adding to the pair's pullback.

Gold struggles as rising yields and hawkish Fed signals weigh

Gold reverses its modest recovery on Thursday as a stronger US Dollar and rising US Treasury yields cap upside attempts, leaving the metal in a bearish consolidation phase near two-month lows. At the time of writing, XAU/USD trades around $4,119, easing from an intraday high of $4,143.

Ripple and Stellar test key support amid rising downside risks

Ripple (XRP) and Stellar (XLM) remain under pressure and extend their corrections on Thursday as weakening derivatives metrics and broader macroeconomic headwinds weigh on sentiment. XRP and XLM approach a key support zone after three consecutive days of losses so far this week.

The UK 30-year gilt just hit a 1998 high. Is that good or bad for the British Pound?

The yield on the UK's 30-year government bond, or gilt, went through 6% on October 1 for the first time since early 1998, and on Monday the Pound was at its strongest against the Euro since June 2025. The gilt market's 28-year high is mostly someone else's. Since early May, the 30-year gilt yield has risen about 0.15 of a percentage point and the US 30-year about 0.7.