Euro slides against British Pound as traders weigh French fiscal crisis, central bank signals
- EUR/GBP falls to its lowest level since June 2025 as France’s fiscal worries weigh on the Euro.
- Traders weigh ECB warnings on French debt and BoE comments on rate-hike expectations.
- Traders await UK GDP and Eurozone inflation data for fresh clues on the BoE and ECB policy outlooks.
EUR/GBP extends its decline on Wednesday, sliding to its lowest level since June 2025 as fiscal and political concerns in France weigh on the Euro (EUR). Traders also assess fresh remarks from central bank officials on both sides of the Channel. At the time of writing, the cross trades around 0.8438, down 0.12% on the day.
Investors remain concerned about France’s high debt and whether the government can secure parliamentary approval for its deficit-cutting budget. These worries keep French bonds under pressure and weigh on sentiment toward the single currency, with the gap between French and German 10-year yields hovering near 140 basis points (bps).
Bank of France Governor and European Central Bank (ECB) policymaker Emmanuel Moulin said on Wednesday, “France must urgently demonstrate commitment to fiscal consolidation and approve 2027 budget, reduce deficit.” Moulin also noted that “the rise in yields may affect demand and prompt a more moderate response to inflation shock,” adding that “inflation mainly driven by Middle East conflict, energy factors.”
Speaking in Bangkok, ECB President Christine Lagarde said the “primary and initial solution to French debt resides in French fiscal policy.” On inflation, Lagarde said, “Inflation has been rising predominantly but not exclusively as a result of energy prices,” adding, “We're not seeing any second round effects yet.”
Markets expect the ECB to leave interest rates unchanged in October, with another increase anticipated in December. The final September Harmonized Index of Consumer Prices (HICP) report, due on Friday, will provide a fresh check on headline and underlying inflation pressure.
On the UK side, the Bank of England (BoE) has kept interest rates unchanged so far this year. However, higher energy costs threaten to keep inflation above the central bank’s 2% target, increasing market expectations for a rate hike.
BoE Chief Economist Huw Pill said on Wednesday that “underlying UK inflation never fell enough pre-Iran shock,” while “UK output and labor market have proven more resilient.” Pill added, “I am a bit more sceptical about market pricing of four rate hikes over the next year,” but argued that an “early move would've shown BoE wasn't ‘holding and hoping’.”
Attention now turns to Thursday’s UK August Gross Domestic Product (GDP), industrial production and manufacturing production figures. The releases could help traders assess how well the economy is holding up under higher energy costs and whether expectations for BoE tightening remain justified.
Euro Price This Month
The table below shows the percentage change of Euro (EUR) against listed major currencies this month. Euro was the weakest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 1.20% | -0.02% | 0.67% | -0.12% | -0.86% | 0.30% | -0.31% | |
| EUR | -1.20% | -1.21% | -0.50% | -1.29% | -2.06% | -0.90% | -1.46% | |
| GBP | 0.02% | 1.21% | 0.67% | -0.08% | -0.88% | 0.31% | -0.19% | |
| JPY | -0.67% | 0.50% | -0.67% | -0.82% | -1.56% | -0.32% | -0.93% | |
| CAD | 0.12% | 1.29% | 0.08% | 0.82% | -0.75% | 0.49% | -0.16% | |
| AUD | 0.86% | 2.06% | 0.88% | 1.56% | 0.75% | 1.18% | 0.63% | |
| NZD | -0.30% | 0.90% | -0.31% | 0.32% | -0.49% | -1.18% | -0.59% | |
| CHF | 0.31% | 1.46% | 0.19% | 0.93% | 0.16% | -0.63% | 0.59% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
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