- The euro’s movement is anticipated in reaction to the second round of voting in France, with strategic moves by the New Popular Front to prevent the far-right National Rally from gaining an absolute majority in the National Assembly
The British pound surged above $1.276 on Thursday, reaching its highest level in three weeks, as voters across the United Kingdom headed to the polls for parliamentary elections.
The Labour Party, currently leading in the polls, appears poised to unseat Prime Minister Rishi Sunak’s Conservative Party. Some projections suggest Labour could secure a majority, marking their first general election victory since 2005.
But, perhaps the more interesting trade is in the euro in reaction to the second round of voting in France scheduled for over the weekend on 7 July.
In a strategic move to prevent the far-right from gaining an absolute majority in the National Assembly, the left-wing coalition known as the New Popular Front (NFP) has announced it will withdraw its candidates in 200 districts where they finished third, lending support to stronger candidates opposing the National Rally (RN).
Forecasts now indicate the RN and its allies are likely to win between 190 and 220 seats, falling short of the 289 needed for an absolute majority. Prior to these withdrawals, polls had estimated the RN could secure between 250 and 300 seats.
In the forex market, a bullish push could see the euro retesting the previous high around 1.0850, with a potential challenge to the 1.0900 psychological level switching the broader outlook to bullish. Conversely, a drop below the 200 SMA may find immediate support at 1.0775, with further support at the 50 and 100 SMA levels around 1.0733.
