EUR/GBP 16-Month Low: 0.8447 Tested as France Weighs

The EUR/GBP 16-month low of 0.8447 came under test on Monday as euro weakness tied to France drew fresh selling. French debt, political deadlock and social unrest have put the euro in focus for FX traders.

Key Takeaways

Two-week slide: EUR/GBP fell around 1.7% over the previous two weeks.
French risk premium: The 10-year OAT-Bund spread stood at 141 basis points on Monday, the highest since 2012, according to FXStreet.
Pound strength: The pound is showing one of the best G8 currency performances so far in October.

What Happened

EUR/GBP resumed its bearish trend on Monday and traded at 0.8447 at the time of writing, FXStreet reported. The 14-period RSI on the 4-hour chart slipped below 30, which signals oversold conditions. The MACD is negative.

The pound found support from the UK growth outlook. Analysts at Commerzbank said "the improved growth outlook should make it easier for the Bank of England to raise rates further in order to lean against inflation".

On the euro side, attention centred on France. Student protests are extending into a third week, adding to concerns over the country's finances and politics.

Background

Euro weakness is linked to ballooning French debt, a political deadlock and spreading social unrest. The French cabinet reportedly lacks parliamentary support for significant reforms ahead of the 2027 Presidential elections.

That political gridlock has fed into bond markets, where the gap between French and German yields has widened. The pound, meanwhile, has benefited from expectations of further Bank of England tightening.

Market Impact

EUR/GBP: The euro is exposed to French fiscal and political stress, while the pound draws support from possible BoE rate rises. Four-hour momentum indicators are oversold.
USD/JPY: The pair traded above 158.00, with talk that authorities may step in to support the yen (reference rate, 2026-10-12: 158.3300). The source does not say whether any intervention took place.
AUD/USD: The pair held below 0.7000 in the Asian session as diminishing odds of another RBA hike in November capped the Australian dollar (reference rate, 2026-10-12: 0.6974).
Gold: The metal slid from a one-week high to an intraday low around $4,170 in the early European session. A firmer U.S. dollar and a hawkish Fed outlook weighed on it.

What to Watch Next

EUR/GBP support and resistance: Support sits at 0.8405-0.8415 (early June 2025 lows) and 0.8355 (May 2025 bottom). Resistance is at 0.8485, 0.8490 (October 6 high) and 0.8500 (October 1 low).
Bank of England rate path: Possible further rate increases underpin the pound. No decision date is given in the source.
French politics ahead of 2027: The lack of parliamentary support for reforms keeps the OAT-Bund spread and the euro in focus before the Presidential elections.

Bottom Line

EUR/GBP is trading at a 16-month low as French political and fiscal strain meets a pound backed by BoE rate expectations. For EUR/GBP traders, the French bond spread and UK rate signals are the two drivers named in the source.

EUR/GBP 16-month low at 0.8447 as France weighs on euro