The Euro gains against the Pound as lower oil prices and hawkish ECB guidance support the currency, even as French political risks persist.
Hopes for a diplomatic breakthrough between the US and Iran ease fears of renewed strikes, pushing WTI toward $83 a barrel, its lowest level since August 31, and down about 16% so far this month. As long as the diplomatic track advances, the geopolitical risk premium stays under pressure. The BoE's note that energy costs stem from the Middle East war shows how quickly supply fears could return if talks fail.
The Euro outperformed most major peers on the day as lower Oil prices relieve the import-heavy Eurozone, and ECB Chief Economist Lane said it 'would be prudent indeed to hike' in December if data stay unchanged, with inflation ending the year a little above 4%. France's political uncertainty and budget challenges still pose a risk to the currency, limiting the bullish case.
The Euro trades with a bullish bias at 0.8357 against the Pound as falling oil prices provide relief to the import-reliant Eurozone. WTI crude oil has dropped to $83 a barrel, marking a 16% decline this month amid hopes for US-Iran diplomatic progress. Meanwhile, ECB Chief Economist Philip Lane signaled a potential December rate hike, while the French-German 10-year yield gap narrowed to 145 bps.
Hopes for a diplomatic breakthrough between the US and Iran have eased fears of renewed strikes, reducing the geopolitical risk premium in the price.
WTI is slipping toward $83 a barrel, its lowest level since August 31, and is down about 16% so far this month.
Falling oil prices, a narrower French-German yield gap of about 145 bps, and hawkish comments from ECB's Philip Lane pointing to a possible December rate hike.
France's political uncertainty and budget challenges remain a risk, and the updated Eurozone GDP figures due Friday could shift expectations.