The pound euro (GBP/EUR) exchange rate is falling on Thursday, giving back yesterday’s gains.
Sterling is under pressure as UK consumer sentiment weakens sharply, dropping to an almost 2-year low, reflecting growing concerns over the inflationary impact of the Middle East conflict.
At the same time, UK gilt yields are nearing 4.85% as markets price in further Bank of England tightening, which supports borrowing costs but weighs on confidence.
The euro is gaining against the pound but slipping versus the dollar, amid deteriorating German consumer sentiment. The GFK German economic sentiment index fell to -28, worse than the -27 forecast.
Rising oil prices and inflation fears are adding to concerns that consumer spending and broader economic recovery could come under increasing pressure.
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