The EUR/GBP is holding steady above 0.8700 as France announces a new government. The Euro is gaining against the Pound due to concerns about possible tax increases in the UK’s Autumn Budget, which are affecting Sterling’s value. UK Chancellor Rachel Reeves is expected to introduce tax hikes in the Autumn Statement to meet fiscal goals, which could slow down economic growth. Analysts warn that this could hurt household confidence, putting pressure on the GBP and pushing the EUR/GBP exchange rate higher.

French Government Stability

French President Emmanuel Macron has announced a new government after talks with Prime Minister Sebastien Lecornu. The lack of plans to dissolve parliament has strengthened the Euro, as Lecornu’s reassurances have eased concerns about political instability. European Central Bank President Christine Lagarde highlighted that France must deliver a budget on time to meet international obligations. However, ongoing political uncertainty might threaten the Euro’s standing. The Pound Sterling is significantly affected by the Bank of England’s monetary policy, with interest rates being a key factor. Economic indicators and trade balance figures also impact the currency’s strength. The Pound Sterling, the fourth most traded currency in the world, is mainly issued by the Bank of England and plays a role in major trading pairs like GBP/USD and EUR/GBP.

Current Market Dynamics

As of today, October 13, 2025, the EUR/GBP cross remains strong above the 0.8700 mark, creating clear opportunities. The Euro’s strength stems from reduced political worries in France, while the Pound is weakening due to concerns over impending tax hikes in the UK’s Autumn Budget. Currently, the market favors the Euro over the Pound. Growing bearish sentiment surrounds the Pound ahead of the budget statement in late November. Recent data from the Office for National Statistics shows that UK GDP grew just 0.1% in the third quarter, and inflation remains high at 3.1%, significantly above the Bank of England’s target. This weak economic outlook makes potential tax increases an obstacle for the Pound. Conversely, the political climate in France seems to be stabilizing, which bodes well for the Euro. Compared to the turmoil caused by the snap legislative elections in summer 2024, this calm period represents a noticeable improvement, giving the Euro a stronger position than the Pound’s uncertain outlook. For derivative traders, this could be a good time to buy EUR/GBP call options expiring in December 2025 or January 2026. This strategy allows traders to prepare for a possible rise in the pair ahead of the UK budget announcement while keeping maximum risk in check. We should keep an eye on upcoming UK employment data, as any unexpected strength in the Pound might provide a better entry point for these trades. Create your live VT Markets account and start trading now.

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