EUR/GBP appreciates to near 0.8500 as French voters boost Marine Le Pen’s National Rally

• EUR/GBP gains ground as investors’ sentiment improves due to Marine Le Pen’s National Rally leading the first round of legislative elections.
• Last week, ECB Governing Council member Olli Rehn hinted that the central bank could reduce interest rates twice more in 2024.
• The UK GDP (QoQ) recorded a 0.7% expansion in Q1, marking its strongest growth in over two years and mitigating expectations of rate cuts.

EUR/GBP continues its upward trend for the third consecutive day, hovering around 0.8500 during Monday's Asian session. The Euro advances as investors’ sentiment improves amidst Marine Le Pen’s National Rally confirming its status as France’s leading political force in the initial round of legislative elections, marking the highest turnout in three decades. While Le Pen’s party secured a clear but not definitive victory, uncertainty prevails ahead of the second round of voting on July 7, as reported by France 24.

Meanwhile, European Central Bank (ECB) Governing Council member Olli Rehn suggested last week that the central bank might cut interest rates twice more this year. Recent data showed that France's annual inflation rate matched expectations, slowing to 2.5%, while Spain's rate fell to 3.5%, slightly above forecasts. Conversely, Italy's inflation accelerated as anticipated to 0.9%. Moreover, Germany’s Consumer Price Index (CPI) data is scheduled for release on Monday.

In the United Kingdom (UK), the upcoming general election on Thursday may induce volatility in the EUR/GBP cross. According to the latest exit polls, the Opposition Labour Party is anticipated to prevail over the Conservative Party led by UK Prime Minister Rishi Sunak.

UK GDP (QoQ) figures have been upwardly revised, showing a 0.7% expansion in the first quarter, up from the previous quarter's 0.6% growth. This marks the strongest growth in over two years and has caused the UK's 10-year Gilt yield to rise to 4.17%, tempering expectations of rate cuts.