Euro hits nearly two-year low against pound in EU election aftermath

Euro plummets amidst political uncertainty in Europe as French president calls for snap parliamentary election

The euro has experienced a notable drop in value due to political instability in Europe, following French President Emmanuel Macron’s call for an unexpected parliamentary election.

According to a Daily Express report, the euro plunged to its lowest level against the pound in nearly two years on Monday, dipping by half a cent to $1.0753. In contrast, the pound appreciated, reaching €1.1829, up by half a cent.

This political uncertainty stems from the weekend’s European Parliament elections, which saw far-right parties make significant advances, leading to a period of instability within the European Union. Macron’s decision to hold a snap election, with the first round slated for June 30, follows the National Rally party’s notable seat gains.

The market has reacted to these developments, with French banks’ shares declining. Société Générale (SocGen), a prominent multinational financial services company based in France, experienced a 5.4% drop in its share price.

This downturn has pushed the French CAC 40 index to its lowest level since February. Analysts at Deutsche Bank, as reported by The Guardian, anticipate a shift in EU policy as a result of the weekend’s election outcomes, stating, “While the elections did not bring a seismic shock to EU-level politics, they are still likely to shift the direction of travel for policy over the next five years. The biggest impact of the election result could be at a national level, with President Macron announcing the dissolution of the French parliament after the defeat of his Renaissance party.”