DailyBubble News
DailyBubble News

EUR/GBP declines toward 0.8400 amid uncertainty over French elections

The EUR/GBP pair is facing potential downside pressure towards the support level of 0.8400. This is due to uncertainty surrounding the Euro caused by French President Emmanuel Macron’s unexpected decision to dissolve parliament and call for a snap election. At the same time, the Pound Sterling remains strong as there are expectations that the Bank of England (BoE) will delay any rate cuts.

Macron’s call for a snap election came after exit polls from Eurozone parliamentary elections showed a desire for change in administration. This has led to political uncertainty as the far-right National Rally, led by Jordan Bardella, made significant gains against the Centrist alliance led by Marine Le Pen.

Despite efforts by the European Central Bank (ECB) to stimulate the economy with rate cuts, the Euro is struggling to gain traction. The ECB recently cut the Deposit Facility Rate, but is cautious about committing to further cuts due to concerns about inflation and steady wage growth. Market expectations suggest that the BoE may only make one more rate cut by the end of the year.

In the UK, interest rates are expected to remain unchanged for a longer period as wage growth continues to be steady despite soft labor demand. The latest labor market report showed that Average Earnings Excluding Bonuses increased as expected. Wage growth has been a key factor driving service inflation, making it challenging for the BoE to normalize policy confidently.

Employment numbers in the UK have decreased for the fourth consecutive time as firms are hesitant to hire due to weak household spending. The ILO Unemployment Rate has risen slightly, indicating some challenges in the labor market.

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