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

By
Web Desk
A woman holds Euro banknotes in this illustration taken May 30, 2022. — Reuters

The euro witnessed a significant decrease in value amidst political uncertainty in Europe following French President Emmanuel Macron’s announcement of a snap parliamentary election.

The currency fell to a nearly two-year low against the pound on Monday, dropping half a cent to $1.0753, according to a report by the Daily Express.

In contrast, the pound reached a high of €1.1829, showing an increase of half a euro cent, the report said.

This uncertainty arises from the considerable gains made by far-right parties in the European Parliament elections over the weekend, leading to a period of political instability in the European Union.

President Macron's decision to call for a snap election, scheduled for the first round on June 30, follows the significant increase in seats won by the National Rally party in the elections.

The repercussions of these events have been felt in the stock market, evidenced by the decline in the shares of French banks.

Société Générale (SocGen) — a French-based multinational financial services company — saw a decrease of 5.4%.

As a result of this sudden drop, the French CAS 40 index has now reached its lowest point since February.

According to analysts at Deutsche Bank, there are expectations of a shift in EU policy following the election results over the weekend, as reported by The Guardian.

The group said: "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."