EUR/GBP holds near one-month low as French political turmoil caps Euro's recovery

• EUR/GBP hovers near 0.8665, its weakest level since September 16.
• Political turmoil in France remains a drag on the Euro.
• Traders eye ECB President Lagarde's speech later Wednesday and the ECB Meeting Accounts on Thursday.

The Euro (EUR) holds steady against the British Pound (GBP) on Wednesday, attempting to stabilize after sliding earlier in the day. At the time of writing, the EUR/GBP cross is trading around 0.8665, hovering near its weakest level since September 16.

The Euro managed to find support even as political tensions in France remained elevated, while the Pound lost some momentum following the release of the Bank of England's (BoE) Financial Policy Committee (FPC) Meeting Minutes.

Political uncertainty in France remains a headwind for the common currency after Prime Minister Sébastien Lecornu resigned, deepening a standoff with President Emmanuel Macron over the budget. Speaking earlier in the day, Lecornu said he is confident that France will have a budget in place by the end of the year and that he would present his findings to President Macron later in the evening. Hopes of progress in these negotiations have helped to stem further losses for the Euro, easing fears of prolonged fiscal paralysis or snap elections.

On the monetary policy front, remarks from European Central Bank (ECB) officials offered a measure of reassurance. Governing Council members Müller, Escrivá and Nagel said the Eurozone economy is on a gradual recovery path, that inflation is near the 2 percent target with expectations anchored, and that current interest rates remain appropriate.

The Pound trimmed earlier gains after the BoE's Financial Policy Committee minutes signalled no change to the countercyclical capital buffer or the leverage ratio. The committee highlighted that stretched equity valuations, especially in major global markets, leave the system vulnerable to a sharp correction, with any sudden repricing of US assets or shifts in investor confidence likely to spill over into the UK.

Looking ahead, traders will watch for remarks from ECB President Christine Lagarde later on Wednesday for fresh clues on the policy outlook. Attention will then turn to the ECB's Monetary Policy Meeting Accounts due on Thursday. The UK economic calendar is relatively light this week, leaving the cross more sensitive to Euro-related headlines and broader market sentiment.