Labour victory ‘would be good news for the pound’; euro weakens after European elections – business live | Business

Oh The Paris stock market fell sharply in early trade after Emmanuel Macron stunned France by calling early elections.

The CAC 40 the index of the largest exchanges in Paris fell more than 2% to a three-month low.

That would be the biggest one-day drop since last November.

The euro’s weakness today sent it to its lowest level against sterling since August 2022.

The pound is trading at €1.1829 this morning, up half a euro cent, the last level seen shortly before Liz Truss’ mini-budget sent the pound reeling:

The euro has weakened in recent months as it became clear that interest rates will be cut faster in the eurozone than in other advanced economies.

Last week, the ECB cut interest rates for the first time in five years, while the Bank of England is not expected to cut them until November.

With less than a month until the UK general election, City investors are weighing up the implications of a new government.

And a survey conducted by Bloomberg found that Labor will win in the UK next month elections would be the best outcome for the pound, while a hung parliament was seen as the worst outcome.

It’s a verdict that will cheer Labor as it tries to convince voters it’s a safe choice on July 4.

Like Derek Halpenihead of research for Europe, Africa and the Middle East in MUFGput it:

“A large stable majority for a Labor party that is less divided than the Tories would signal better stability going forward.”

Shadow chancellor Rachel Reeves has gone to great lengths to reassure city councilors they can trust her party, claiming Labor is the “natural side of British business” and rules out rises in income tax, national insurance and VAT.

Less encouragingly, around 60% of those surveyed – including portfolio managers, economists and retail investors – believe it will take more than five years for the pound to return to the $1.50 level at which it traded before the 2016 EU referendum.

More here.

Good morning and welcome to our ongoing coverage of business, financial markets and the global economy.

The euro is under pressure today as traders process last night’s EU election results and the shock parliamentary elections being held in France.

Political uncertainty pushed the single currency to a one-month low; it is down half a cent this morning to $1.0753. Against the pound, the euro fell to a near two-year low.

European stock markets are also expected to open in the red.

The euro lost ground after the president of France, Emmanuel Macronannounced he would dissolve parliament and call early legislative elections after his allies suffered a crushing defeat To Marine Le Pen far right National Rally (RN) in the European Parliament elections on Sunday.

It was also a bad election for a German chancellor Olaf Scholzwhose Social Democrats achieved their worst ever result, while the far-right an alternative for Germany (AfD) secured second place.

Macron made his shock move after his centrist list headed by the MEP Valerie Heyerscored just 15% in the European poll, less than half the 31.5% result reported by RNwhose leading candidate was the party president, Jordan Bardella.

Analysts say it is unprecedented in modern French politics for a president to call early parliamentary elections from a position of weakness.

Macron, who still has three years left in his presidency, may want to put the RN under greater scrutiny and present French voters with a clear choice – either a pro-European, pro-Ukraine, centrist position or a far-right alternative.

Mujtaba Rahmanmanaging director for Europe in Eurasia Groupexplains:

Just over half of French voters turned out on Sunday, compared to 70% in the national election. No party that has “won” a European election in France has won the next national election. elections.

All attempts by the Macron camp to turn the campaign into a referendum on the war in Ukraine or. the survival of the European Union or on the competence and extremist past of Le Pen and her main allies, fell on deaf ears. From the start, the campaign was a referendum on Macron’s seven years in power – and it took particular aim at “far-right” issues such as immigration and violence.

Although right-wing parties made significant gains across Europe, the President of the Commission Ursula von der Leyen managed to claim that “the center is holding”, with candidates from her centre-right European People’s Party securing the most seats.

But the main parties lost seats across the board, which will complicate von der Leyen’s bid for a second five-year term as head of the European Commission.