The EUR/GBP cross trades in positive territory for the fifth consecutive day, around 0.8490, during the early European session on Tuesday. The Euro (EUR) has edged higher following the first round of French elections, where Marine Le Pen’s far-right National Rally (RN) secured 33.15% of the vote. This result indicates that while the RN is poised to outperform President Emmanuel Macron’s centrist alliance, it may still fall short of an outright majority in parliament. Investors are now focusing on the preliminary Eurozone Harmonized Index of Consumer Prices (HICP) data for June, which is due on Tuesday.

In the French parliamentary elections, Macron’s alliance experienced significant losses, securing only 20.76% of the vote and coming in third place. Meanwhile, the left-wing New Popular Front (NFP) coalition garnered 27.99% of the vote, reflecting a strong showing. Despite the RN’s lead, it is expected to fall short of the 289 seats needed for an absolute majority. This outcome has provided some support for the Euro against the Pound Sterling (GBP), as the risk of significant political upheaval in France seems mitigated.

BBVA’s chief strategist Alejandro Cuadrado noted that if the RN had won an outright majority, the Euro could have faced additional short-term challenges. However, the current scenario appears to have stabilized the shared currency.

On the other hand, the GBP has weakened due to investor uncertainty regarding the Bank of England’s (BoE) timeline for cutting interest rates. Additionally, market participants are cautious ahead of the UK’s election outcome on Thursday. Recent exit polls suggest that the opposition Labor Party is expected to win over the Conservative Party led by Prime Minister Rishi Sunak.

Overall, the EUR/GBP cross continues to hold its ground above 0.8450, bolstered by the Euro’s strength following the French elections and tempered by the GBP’s weakness amid political and economic uncertainties. Investors will be closely watching the upcoming Eurozone inflation data and UK election results for further direction.