Sterling Struggles Amid Elevated Global Borrowing Costs

British assets are under pressure due to high global borrowing costs. Sterling is down for the fourth consecutive day, while gilt yields have risen. The UK's economic outlook is strained by high yields and limited fiscal flexibility for the finance minister, causing market volatility.

British markets faced continued pressure on Friday as global borrowing costs remained elevated, leading to a sustained decline in sterling and rising gilt yields. Despite both indices moderating from previous extremes, the economic scenario remains precarious.

The pound experienced a slight drop of 0.12% against the dollar, touching $1.2292, following a dip to a 14-month low earlier in the week. Benchmark 10-year gilts increased by 3 basis points, settling at 4.84%.

This turmoil is primarily attributed to uncertainties stemming from the US, affecting global markets and heavily impacting the UK. Sterling has witnessed a 1% decline this week, and rising gilt yields have increased financial pressure on UK's fiscal policies.

(With inputs from agencies.)