Pound-Euro Falls as UK Gilt Yields Hit 19-Year High

Modified: Wednesday, 2 September 2026 22:31 BST - Written by David Woodsmith

STORY LINK Pound-Euro Falls as UK Gilt Yields Hit 19-Year High

The Pound Euro (GBP/EUR) exchange rate fell to a near two-week low on Wednesday, as rising UK government bond yields added pressure to Sterling.

At the time of writing, GBP/EUR was trading at €1.1648, marking its lowest level in 13 days.

The Pound (GBP) struggled on Wednesday, with a quiet UK data calendar offering Sterling little in the way of fresh support.

Rising government borrowing costs continued to weigh on the currency, while British gilt yields climbed to their highest level since August 2007.

The move fuelled concerns that elevated borrowing costs could put further pressure on the UK economy and leave the British government facing tighter fiscal conditions.

Additionally, a global risk-off market mood dampened demand for the increasingly risk-sensitive Pound.

The Euro (EUR) found some support against the Pound on Wednesday as investors moved towards safer assets.

However, gains for the single currency were restrained by a quiet Eurozone data calendar and ongoing geopolitical concerns.

EU politicians were preparing a response after Germany formally blamed Russia for last month’s drone attack on Leipzig airport, raising fears that tensions between Brussels and Moscow could escalate further.

Near-Term GBP/EUR Forecast: Eurozone and UK PMIs in Focus

Looking ahead, the final UK and Eurozone services PMIs are set for release on Thursday morning, with the data likely to influence the Pound to Euro exchange rate.

A confirmation that activity across the UK’s service sector picked up pace in August could give Sterling a lift.

The Eurozone’s latest producer price index may also shape the pairing.

If producer price inflation jumped in July, the Euro could benefit if this strengthens expectations for higher consumer inflation and prompts markets to raise their bets on European Central Bank (ECB) interest rate hikes.

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TAGS: Pound Euro Forecasts