As political turmoil unfolds, the tremors of France's political earthquake are reverberating across Europe, and sterling is emerging as a beneficiary. With Barnier's government on the verge of collapse, this instability and a looming budget crisis have put significant downward pressure on the euro and caused bond yields to spike. As the eurozone's second-largest economy, the currency is facing its most serious challenge since the sovereign debt crisis while France teeters on the brink of political chaos. Consequently, the euro has already sharply depreciated against the pound and shows no signs of abating given the gravity of the situation, so may see the euro test new lows in the coming days.

A breach of the 0.82 level is not out of the question, potentially pushing the exchange rate towards 0.80 in the following weeks. This would mark a significant milestone, representing a level not seen since the aftermath of the Brexit referendum. As the suspected no-confidence vote fast approaches, the outcome could determine not only the fate of the French government but also the short-term trajectory of the euro.