EUR/GBP traded near 0.8690 in early European hours on Monday, supported by a softening Pound Sterling (GBP) amid lingering concerns over the UK fiscal outlook. Investors are also awaiting remarks from ECB board members Isabel Schnabel and Joachim Nagel later in the session.
Pressure on the Pound comes amid growing uncertainty surrounding the upcoming UK Autumn Budget. Chancellor of the Exchequer Jeremy Reeves confirmed that no increase in the wealth tax is planned but indicated that additional tax hikes and spending cuts remain on the agenda.
Comments from Bank of England (BoE) officials have provided some support to the Pound. Governor Andrew Bailey emphasized that any future rate cuts would be “gradual and careful,” while BoE Chief Economist Huw Pill advocated a cautious approach, citing persistent inflationary pressures. These remarks may help limit GBP losses despite fiscal concerns.
On the Euro side, S&P Global Ratings downgraded France to A+ from AA- over the weekend, marking the loss of its AA- rating at two of the three major agencies in just over a month, following previous downgrades from Fitch and DBRS. Heightened budget uncertainty and political challenges in France could weigh on the Euro, potentially offsetting some of the gains in EUR/GBP in the near term.
