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Euro softens versus pound as France fiscal fears lift contagion risk

EUR/GBP slipped to about 0.8475 in early European trading as investors weighed the risk of spillover from a French bond selloff.

Reported · Written up by our desk · Major Pairs

In early European trading on Monday, the EUR/GBP cross drew selling pressure around 0.8475, as the euro weakened against the British pound. FXStreet attributed the move to fiscal concerns in France following a steep rout in French bond markets, which raised contagion fears across the Eurozone.

FXStreet said the market turmoil has revived worries that France’s fiscal troubles could spread more widely in the region, echoing the sovereign debt crisis more than a decade ago. The outlet also noted expectations that the European Central Bank could be prompted to intervene to support French government debt.

FXStreet quoted Spectra Markets’ Brent Donnelly, saying political tensions in France that were expected to intensify ahead of the April 2027 elections have already surfaced. Donnelly added that France’s budget promises are not viewed as highly credible given an expected change of power.

The report also referenced Bank of England policymaker Catherine Mann, who said a rate hike is needed to manage inflationary risks, noting that financial conditions still require tightening, according to FXStreet.

Latest closeBrent $102.70 ▲0.4%

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