EUR/GBP stays near 0.8700, further downside appears due to political instability in France

• EUR/GBP may further depreciate after France's Prime Minister Sebastien Lecornu and his government resigned on Monday.
• ECB President Christine Lagarde told that the ECB has achieved its disinflation targets.
• The Pound Sterling may gain support as markets remain cautious about the BoE policy stance.

EUR/GBP stays silent after two days of losses, trading around 0.8690 during the Asian hours on Tuesday. The currency cross may further lose as the Euro (EUR) struggles after France's new Prime Minister Sebastien Lecornu and his government resigned on Monday.

Lecornu has resigned just weeks after his appointment, making it the shortest-lived administration in modern French history. Fitch downgraded France's ratings last month, and Moody's is widely anticipated to follow suit before the end of October.

European Central Bank (ECB) President Christine Lagarde stated before the European Parliament's Economic and Monetary Affairs Committee that the ECB has met its disinflation targets. Lagarde also hinted at the potential for the Euro to play a larger role in global trade amid efforts by the Trump administration to erode international confidence in the US Dollar (USD).

The EUR/GBP cross may further lose ground as the Pound Sterling (GBP) could receive support from the market caution regarding the Bank of England's (BoE) policy stance. This could be attributed to the persistent inflationary pressures and cooling labour market conditions. German Factory Orders for August will be eyed later in the day.

The BoE projected at the August policy meeting that inflation would peak around 4% in September. However, Deputy Governor Clare Lombardelli and MPC member Catherine Mann cautioned last week that the recent inflation shocks should not be viewed as temporary.