The pound-euro (GBP/EUR) exchange rate has fallen for a third straight day, reaching a monthly low.
The EUR is surging after German Chancellor Friedrich Merz, together with other leaders, announced plans to reform Germany’s debt brake. This fiscal U-turn will increase defence and infrastructure spending by €500 billion.
German bunds have tanked by the most since the collapse of the Berlin Wall.
The pound is falling as gilt yields rise, but not by as much in Germany.
Chancellor Rachel Reeves could cut welfare spending in the Spring Budget to balance the books.