- Pound (GBP) is rising after Chancellor Reeves pledges stability
- BRC survey shows fewer firms plan price increases
- Euro (EUR) falls after Let wing alliance wins the election
- Concerns over spending and debt levels return
The Pound Euro (GBP/EUR) exchange rate is rising, adding to last week’s gains. The pair rose 0.18% in the previous week, settling on Friday at €1.1817 and trading in a range between €1.1766 and €1.1834. At 13:00 UTC, GBP/EUR trades +0.23% at €1.1844.
The euro is falling at the start of the week following the shock French election results.
The left-wing alliance emerged as victorious after voting in the second round of the French elections, which took place on Sunday, July 7th.
Meanwhile, Macron’s centrist party came second, and Marine Le Pen’s far-right came in a surprise third place after a strong performance in the first round.
The market is breathing a sigh of relief that the far right performed worse than expected after apparent tactical voting in France.
Meanwhile, there are some concerns that the Left alliance, which campaigned to increase spending, could be bad news for France’s debt levels. However, the fact they haven’t won an outright majority—which means France is set to have a hung parliament—means they could be limited in what they can do.
Taxing negotiations between the parties will now begin in order to try to form a working government.
On the data front, the market has shrugged off weaker-than-expected investor sentiment data. Sentix investors fell to -7.3 in July after rising 0.3 in Jane
The pound is rising after a rallying speech from Rachel Reeves, the new chancellor of the exchequer. In her first speech, Reeves promised stability and planning reform.
Meanwhile, data from the British Retail Consortium showed that fewer retailers are considering raising prices in the coming months.
The BRC report showed that 39% of companies plan to raise prices over the next three months, which was down from 46% previously.
The news will be well received by the Bank of England as they assess whether to start cutting interest rates in August.
