Pound falls to three-month lows as investors fret over rates, oil
TLT•Sterling fell as much as 0.5% to $1.3193, its lowest since late June, as investors worried about high rates, oil prices and persistent inflation. British 30-year gilt yields topped 6% for the first time since early 1998.
1. Sterling hits three-month low
The pound fell as much as 0.5% to $1.3193, breaking below $1.32 for the first time since late June. It was last down 0.3% at $1.3225 as concerns about high rates, oil prices and persistent inflation rattled European markets.
2. Gilt yields top 6%
Investors were concerned that oil above $100 a barrel amid a protracted Middle East war could bring higher borrowing costs and inflation. The FTSE 100 fell as much as 2% before recovering some losses, while British 30-year gilt yields topped 6% for the first time since early 1998, four weeks before the Autumn Budget.
3. UK finances in focus
AJ Bell investment director Russ Mould said rising gilt yields presented a major challenge for the government’s spending and borrowing plans. Prime Minister Andy Burnham said he would make pension changes to fund universal social care and welcomed debate about closer ties with Europe; ING strategist Chris Turner said a move to rejoin the EU would likely be viewed positively by foreign exchange markets, though clarity was years away.
