Euro Slumps Amid Soaring Inflation and French Borrowing Costs

The Euro has hit fresh two-month lows against the British Pound on Friday, falling just above 0.8500 and poised to show a more than 1% weekly decline.

This reversal comes after hot Eurozone inflation data was released earlier in the day, showing that the region's Harmonized Index of Consumer Prices (HICP) accelerated to three-year highs in September, boosted by higher energy costs stemming from the Middle East war.

The HICP rose to a 3.8% year-on-year rate, beating expectations of a 3.6% growth, while the core HICP, which strips out food and energy costs, showed a more moderate increase to 2.5% from 2.4% in August.

Concerns about France's soaring borrowing costs are also contributing to the Euro's weakness, with the gap between German and French government bond yields surging beyond 140 basis points on Friday, the highest differential since 2012.