German Government Bonds

The annualized yield to maturity on bonds 6 months of the German Government is 2.7% while the annualized yield to maturity comparable 6 months UK government bonds is 4.25%. Suppose that investors do not expect interest rates in both countries to change significantly over the next 6 months. What suggests that these returns on investors' expectations of the exchange rate of the pound against the euro (euro / pound)?

If they demand a higher return to hold bonds denominated in sterling and do not expect interest rates to change, and they expect the pound to decline.

If a financial asset has a higher yield because of its generally it is a riskier investment. The reason is something more dangerous means he has more chance of losing its value compared to something to provide a lower yield.

Thus, the higher return on the British link implies an expectation of the value of the pound to fall against the euro.