The EUR/GBP pair ticks lower and sustains below the cruical resistance of 0.8300 in Wednesday’s North American session. The asset is expected to remain highly volatile with investors focusing on French no-confidence vote that is expected to result in a collapse of Prime Minister Michel Barnier’s government.

Marine Le Pen-led-Far Right allied with Left wing and proposed a non-confidence motion after claiming budget from Barnier’s government as “flawed and harmful” for French people. The budget in question proposed €60 billion in tax increases and spending cuts aimed at addressing France’s ballooning deficit, according to Firstpost.

Market participants worry that the impact of burgeoning defict will widen as a new election is not allowed until Summer.

Apart from French political crisis, growing expectations of more interest rate cuts from the European Central Bank (ECB) are also weighing on the Euro (EUR). The ECB is expected to cut push its Deposit Facility Rate lower to 1.75% by the end of 2025. For the policy meeting on December 12, ECB policymaker and Governor of Austrian Central Bank Robert Holzmann supported 25 basis points (bps) interest rate cut to 3%, indicated in an interview on Tuesday. “As the data currently stands, I think a reduction of 0.25 percentage points is conceivable, not more,” Holzmann said.

Meanwhile, the Pound Sterling (GBP) remains firm against a majority of its peers even though Bank of England (BoE) Governor Andrew Bailey predicted four interest rate cuts in 2025, said in an interview with the Financial Times (FT) in Wednesday’s European session. Bailey didn’t offer any cues about likley interest rate action in the meeting on December 19 but traders expect the BoE to leave policy rates unchanhed at 4.75%.

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