The Euro (EUR) remained under pressure against the British Pound (GBP) on Wednesday, attempting to recover from earlier losses. At the time of writing, the EUR/GBP pair trades around 0.8665—close to its weakest level since mid-September. Despite ongoing political turbulence in France, the Euro managed to hold its ground, while the Pound pared earlier gains following the release of the Bank of England’s (BoE) Financial Policy Committee (FPC) meeting minutes.
French political turmoil limits Euro’s upside
Political uncertainty in France continues to act as a drag on the common currency after Prime Minister Sébastien Lecornu’s resignation intensified tensions with President Emmanuel Macron over the national budget. Lecornu said earlier in the day that he was confident France would finalize a budget by year-end and planned to present his findings to Macron later in the evening. These remarks helped limit additional losses for the Euro by calming concerns about a prolonged fiscal deadlock or the potential for snap elections.
ECB comments offer limited support
Remarks from several European Central Bank (ECB) officials provided some reassurance to markets. Governing Council members Müller, Escrivá, and Nagel said the Eurozone economy remains on a gradual recovery path, inflation is moving closer to the 2% target, and current interest rate levels are appropriate. Their comments helped reinforce expectations that the ECB will maintain its policy stance in the near term.
BoE minutes dampen Pound’s momentum
The Pound gave up part of its earlier strength after the BoE’s FPC minutes indicated no changes to the countercyclical capital buffer or leverage ratio. The committee cautioned that elevated equity valuations—particularly in major global markets—could expose the financial system to a sharp correction. It also warned that any sudden repricing of US assets or a decline in investor confidence could spill over into UK markets.
Focus shifts to Lagarde’s speech and ECB minutes
Investors now turn their attention to upcoming remarks from ECB President Christine Lagarde later on Wednesday for further guidance on the policy outlook. The release of the ECB’s Monetary Policy Meeting Accounts on Thursday will also be closely watched. With a light UK data calendar this week, movements in the EUR/GBP cross are likely to remain driven by Euro-related developments and broader market sentiment.
