Pound-to-Euro Today: 1.18 as French Debt Fears Hammer EUR Rates

Modified: Monday, 5 October 2026 20:16 BST - Written by David Woodsmith

STORY LINK Pound-to-Euro Today: 1.18 as French Debt Fears Hammer EUR Rates

The Pound to Euro (GBP/EUR) exchange rate climbed to its highest level in a year on Monday, with growing concerns over France’s deteriorating fiscal position putting significant pressure on the single currency.

At the time of writing, the GBP/EUR exchange rate was trading at around €1.1801, up roughly 0.3% from the start of Monday’s session.

France’s worsening debt position continued to drag on the Euro (EUR) at the start of the week, sending the single currency to fresh multi-month lows against several of its major counterparts.

Investor confidence in French government debt took another hit last week, with the yield premium demanded to hold French bonds over German Bunds widening to around 150 basis points.

This represented the largest spread since the height of the Eurozone sovereign debt crisis in 2011.

Political divisions in Paris have compounded the problem.

France’s minority government faces an uphill struggle to secure parliamentary backing for its proposed 2027 budget, which seeks to reduce spending by €54bn and bring the country’s deficit under control.

Concerns are no longer limited to France, either.

Growing unease surrounding the country’s finances has raised fears that fiscal instability could spread across the wider Eurozone.

Borrowing spreads in Italy and Belgium have also widened in recent weeks, pointing to a broader increase in investor caution towards European government debt.

The resulting comparisons with the Eurozone debt crisis have added another layer of pressure to the single currency.

Sterling (GBP) was able to make strong gains against the Euro on Monday but struggled elsewhere, with the currency trading broadly lower against several of its other major counterparts.

A sparse UK economic calendar left GBP without a major domestic driver, encouraging investors to focus on developments across global financial markets instead.

Risk appetite remained subdued during the opening stages of European trade, limiting Sterling’s ability to build on its gains despite the sharp decline in the Euro.

Near-Term GBP/EUR Forecast: Weak German Factory Orders Could Add to EUR Pressure

Germany’s latest factory orders figures will provide the next significant catalyst for the Pound Euro exchange rate on Tuesday.

Economists expect August’s data to show another contraction in new orders, which could reinforce concerns about the health of Germany’s industrial sector and place further pressure on the Euro.

Sterling, meanwhile, faces another quiet session on the domestic data front.

Without any major UK releases to provide direction, broader market sentiment and developments elsewhere in the currency market are likely to remain important influences on GBP.

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TAGS: Pound Euro Forecasts