Euro Weakens Against Pound as French Fiscal Fears Mount

FXStreet··EUGBFR·Read original
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Summary · why it matters

The Euro weakened against the British Pound to around 0.8475 in early European trading on Monday, pressured by French fiscal concerns following a steep bond market rout that stoked contagion fears across the Eurozone. Analysts at Brown Brothers Harriman noted that France's minority government has presented a plan to cut the budget deficit to 5.0% of GDP next year, but doubt the proposal will clear parliament without significant concessions, and warned that a rollover of the 2026 budget could push the deficit from 5.4% of GDP in 2026 to roughly 6.0% in 2027, moving France further from its European Commission commitment to bring the shortfall below 3% by 2029. Brent Donnelly, president of foreign exchange trading at Spectra Markets, said any budget promises made by the French government now are not very credible with a change of power coming soon. On the monetary policy side, Bank of England policymaker Catherine Mann said a rate hike is needed to manage inflationary risks, and markets are currently discounting roughly 30 basis points of rate hikes by the UK central bank through the end of the year, alongside approximately 90 basis points of cumulative tightening through 2027. On the daily chart, EUR/GBP remains capped below its key moving averages, with initial resistance at the Bollinger lower band around 0.8500 and further barriers at the Bollinger midline near 0.8565 and the 100-day simple moving average at 0.8580.

Impact on assets 3

Others± Mixed · 2 stocks
Others▲ · 1 stocks

Off-coverage companies 2

Brown Brothers Harriman & Co.Private± Mixed
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Spectra MarketsPrivate± Mixed
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