EUR/GBP weakens to near 0.8700, French government plans to postpone pension reforms

• EUR/GBP softens to near 0.8705 in Wednesday's early European session.
• Political uncertainties in France undermine the Euro against the Pound Sterling. 
• Signs of a cooling UK labor market have boosted expectations for more rate cuts by the BoE in the remainder of the year. 

The EUR/GBP cross drifts lower to around 0.8705 during the early European session on Wednesday. The Euro (EUR) remains weak against the Pound Sterling (GBP) after France's President Emmanuel Macron reappointed Sébastien Lecornu as Prime Minister. The Eurozone Industrial Production data for August will be released later on Wednesday. 

Lecornu suspended a landmark 2023 pension reform until after the 2027 presidential election in a bid to end the political turmoil that has gripped the country for months. The reappointment was widely seen as a temporary measure. Traders are concerned that Lecornu's weak government can survive long enough to deliver a meaningful budget or political stability. This, in turn, could undermine the EUR against the GBP in the near term. 

On the other hand, the UK Unemployment Rate unexpectedly rose and wage growth slowed more than expected in new data released on Tuesday. This employment report prompted traders to add to bets on further interest-rate cuts from the Bank of England (BoE), which might cap the upside for the GBP. Traders expect the UK central bank to cut interest rates further by 46 basis points (bps) this year, according to Reuters.

The UK Unemployment Rate climbed to 4.8% in the three months through August, the highest since May 2021, the Office for National Statistics showed Tuesday. Economists had expected it to remain unchanged. Meanwhile, wage growth in the private sector declined to 4.4%, the lowest since the end of 2021 and below the 4.5% forecast.