The euro is on track for its worst month against the pound since July 2022, dropping more than 2% in October. Concerns over France’s political instability and rising borrowing costs have weighed on the common currency, while the UK’s relatively stable budget and stronger economic data have boosted sterling. The EUR/GBP pair fell to its lowest level since April 2025, with analysts predicting further declines toward 0.83 by year-end.
France’s budget deficit, now at 25-year highs, and upcoming national elections have intensified market pressure. In contrast, the UK’s economic resilience and IMF growth upgrades have supported the pound. Wells Fargo and Rabobank strategists attribute the trend to diverging fiscal outlooks, with the eurozone’s second-largest economy facing greater risks.
Options markets now signal bearish sentiment toward the euro, reversing recent optimism.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing