Peter doesn't pick up on why she's confused just that she is confused. The first option his mind comes up with is the one he assumes to be correct based on the language she spoke.

"Oh! I see-uh-Excusez-moi, je ne savais pas que vous parliez français." He thinks she doesn't speak English and opts to switch to French.


(( Translation: Excuse me, I didn't realize you speak French. ))