EUR/GBP dips below 0.8700 on risk aversion, doubts about French government

• The Euro eases below 0.8700 against the British Pound, and turns negative on the Daily charts
• Investors' concerns about the fragility of France's new cabinet keep the EUR rallies limited.
• In the UK, September's employment figures and BoE Bailey's comments might set the GBP's direction on Tuesday.

Euro recovery attempts against the British Pound have been capped at 0.8707 earlier on the day, and the pair retreated to levels right below 0.8700 amid a cautious market mood, although it remains above session lows, at 0.8685 so far.

The Common currency is losing ground across the board on Monday morning, with investors pondering the chances of success of the new cabinet in France, with concerns about a trade war between the US and China curbing risk appetite further.

In France, President Macron has reappointed Sébastien Lecornu as the Prime Minister, who, himself, named Roland Lescure as his finance minister again, to form a cabinet with a high resemblance to the one that lasted 14 hours last week. Investors remain sceptical about their ability to pass a budget through a divided parliament.

Meanwhile, in the US, the looming trade war with China is offsetting news about the peace deal in Gaza, which keeps traders wary of risk. US President Trump attempted to cool off tensions by toning down his rhetoric in a social media tweet, but the Chinese authorities have defended the restrictions on rare earths trade and announced retaliation if Trump's threat of 100% tariffs comes into effect.

In the UK, later today, BoE MPC member Catherine Mann will meet the press and might give some clues about the bank's monetary policy, although the focus will be on remain on the UK employment data on Tuesday, that will frame BoE Governor Bailey's speech later on the same day.