Pound-to-Euro Nears 15-Month High as France's Debt Crisis Deepens

Modified: Thursday, 8 October 2026 22:31 BST - Written by David Woodsmith

STORY LINK Pound-to-Euro Nears 15-Month High as France's Debt Crisis Deepens

The Pound to Euro (GBP/EUR) exchange rate extended its recent gains on Thursday, remaining close to the 15-month high reached earlier in the week.

At the time of writing, GBP/EUR was trading at around €1.1806, having edged modestly higher since the start of the session.

Persistent concerns surrounding France’s finances continued to limit demand for the Euro (EUR) on Thursday, while elevated European energy prices added to pressure on the single currency.

Brent crude returned above $104 a barrel as fresh supply worries pushed oil prices higher.

Alongside raising concerns over the outlook for inflation across the Eurozone, the move contributed to another increase in regional borrowing costs.

France remained firmly in focus, with investors increasingly questioning the sustainability of its €3.5tn debt pile and the government’s ability to address its substantial budget deficit.

Political opposition to proposed spending reductions has also raised doubts over whether the necessary measures can secure parliamentary backing.

Sterling found some modest support on Thursday following comments from Bank of England (BoE) Governor Andrew Bailey.

Although Bailey’s speech primarily addressed the need for financial markets to improve their resilience to future fiscal shocks, he also highlighted the importance of keeping monetary policy focused on bringing inflation back towards its target.

With energy prices remaining elevated, Bailey warned that inflationary risks could intensify further.

He also reiterated that the BoE remains ‘fully committed’ to returning inflation to target.

Near-Term GBP/EUR Forecast: UK Bond Market Moves Back into Focus

As the week draws to a close, developments in France are likely to remain a key influence on the Euro.

Sterling traders, however, may also be watching the UK bond market closely as borrowing costs continue to climb.

A further increase in gilt yields could revive concerns over the limited fiscal headroom available to Chancellor John Healey ahead of his upcoming Budget.

Such concerns may weigh on Sterling and limit the Pound’s recent gains against the Euro.

For the single currency, attention will turn towards speeches from European Central Bank (ECB) policymakers on Friday.

A more hawkish tone from officials could strengthen expectations of further ECB rate increases and potentially provide the Euro with a degree of support.

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TAGS: Pound Euro Forecasts