EUR/GBP slumps to 20-months low near 0.8450 on French Macron’s call for snap election

• EUR/GBP falls to 0.8450 as the Euro is weighed down by the Eurozone’s political uncertainty.
• French President Emmanuel Macron called for s snap election.
• The next move in the Pound Sterling will be guided by UK’s Employmnet data for quarter-to-April.

The EUR/GBP pair declines to 20-month low near 0.8450 in Monday’s European session. The cross falls on face after an unexpected call for snap election by French President Emmanuel Macron spooks Eurozone’ polictical stability, which resulted in a significant selling pressure on the Euro across the board.

The unexpected move by French Macron came after exit polls showed record seats of Marine Le Pen’s far-right National Rally (RN) in European parliamentary elections under the leadership of the party’s president, Jordan Bardella. Far-right seats were more than double from Macron’s centrist list at 32%-33%.

On the monetary policy front, European Central Bank (ECB) policymakers appear to be uncomfortable for considering subsequent rate cuts as they cautioned about inflation remaining stubborn ahead. On Friday, ECB policymaker and President of the Deutsche Bundesbank Joachim Nagel warned that inflation could turn out sticky especially in the service sector due to firm wage growth prospects.

In addition to ECB Nagel, ECB policymaker Robert Holzmann, who didn’t vote for a rate cut in last week’s monetary policy when the Deposit Facility Rate was lowered for the first time in five years, cautioned that inflation could increase again if the Fed maintains a hawkish stance for a longer period.

Meanwhile, the Pound Sterling will dance to the tunes of the United Kingdom’s (UK) Employment data for the February-April period, which will be published on Tuesday. The ILO Unemployment Rate is estimated to have remained steady at 4.3%.

Investors will also pay attention to Average Earnings (excluding and including bonuses), which are expected to grow steadily. Stable wage growth would dampen market speculation about Bank of England (BoE) rate cuts.