Pound edges higher, outperforming as investor nerves rattle euro zone markets
TLT•Sterling rose 0.1% to $1.34 as UK assets outperformed amid outflows from euro zone markets. Traders priced in at least three Bank of England quarter-point rate hikes by April, while the euro fell 0.5% against the pound this week.
1. Sterling gains ground
The pound edged higher on Thursday as UK stocks, bonds and the currency outperformed other regional markets. Money markets priced in at least three quarter-point Bank of England rate hikes by April, with the first expected at the November 5 meeting, compared with roughly two European Central Bank hikes.
2. Euro zone pressure
Investor concerns about high oil prices, the cost of the AI buildout and government debt weighed on riskier European assets. French bond yields reached new 24-year highs, while UK gilt yields were flat; the FTSE 100 fell 0.6%, outperforming the STOXX 600, which dropped 1%.
3. Currency outlook
Sterling was up 0.3% against the dollar over the past month, while the euro was down 2%. The euro fell 0.5% against the pound so far this week, heading for a fourth straight weekly decline; LSEG data showed options traders were most negative on the euro’s prospects against sterling since mid-2024.
