LONDON (Reuters) – The pound hit its highest level in almost two years against the euro on Monday, although it fell against the dollar as the single currency fell after French President Emmanuel Macron called early elections after his defeat in a pro-European Union vote before parliament. Far right.
The euro fell to 84.53 pence, its lowest level since August 2022, breaking its recent range against the pound, and also fell against the dollar alongside declines in French and other euro zone assets.
It decreased in recent trading by 0.37% to 84.59 pence.
The centre, liberal and socialist parties were set to retain their majority after the European Parliament elections, but Eurosceptic nationalists made the biggest gains, raising questions about the ability of major powers to drive politics in the bloc.
In a risky gamble to restore power, Macron called for parliamentary elections with a first round on June 30.
Chris Turner said: “We expect to hear a lot about the varying political landscape, with the upcoming UK general election expected to deliver a very large Labor majority, while the French election promises to create a parliament completely opposed to the presidency.” , head of global markets for ING, in a note.
“We probably can't rule out a slight decline this week – perhaps to 0.8400… but we think this GBP rally will not last and will probably reverse next week when we hear from the Bank of England next Thursday – likely setting the market up for a new rally.” “Rate cut in August,” Turner added.
UK wages data for April, due on Tuesday, is the main data point for the week, ahead of the Bank of England meeting. Markets viewed a policy change at that meeting as highly unlikely since flat services inflation in April.
Also in the mix, an industry survey, published on Monday, suggested that Britain's employment market was poised for a rebound.
But sterling fell 0.2% against the dollar on Monday, to $1.2698, extending declines after a 0.5% drop on Friday, as hotter-than-expected US jobs data prompted markets to back off bets on a first bank rate cut. Federal Reserve in late 2024.
(Repost by Alun John; Editing by Mark Potter)