EU swing to the right means cheaper holidays for Brits! Euro plummets against the pound off the back of election results – meaning you’ll get more for your money this summer

The euro fell sharply to its lowest level against the pound for almost two years overnight, hit by political uncertainty following European Parliament elections.

One Euro was worth 84.53 pence at one point after Eurosceptic nationalist parties made the biggest gains in Sunday’s election, and after Emmanuel Macron called a shock legislative election having been trounced in the vote by the far-right.

It is the lowest since August 2022, and a boon to British holidaymakers set to vacation in Europe this summer who will get more for their money in the Eurozone.

The drop came after the French president suffered a humiliating defeat to Marine Le Pen’s National Rally party, which took home a projected 31.5% of the vote. 

Far right parties also notched a string of high-profile wins elsewhere in the bloc, finishing first in France, Italy and Austria, and coming second in Germany and the Netherlands, according to preliminary results.

Pictured: A graph shows the euro was worth 84.62 pence this morning. At one point, it dropped to 84.53 – its lowest level against the pound for almost two years

As the results came in, the euro also hit a one-month low against the dollar – down 0.44% at $1.0753 – and has now slid more than 2.5% against the dollar this year.

French bond prices also fell following Macron’s decision to call snap elections.

Yields were pushed to their highest in two weeks, around 3.17%, while Paris blue-chip stocks dropped 2%, led by steep losses in the likes of lenders such as BNP Paribas and Societe Generale. Europe’s benchmark STOXX 600 also fell 0.7%.

Centre, liberal and Socialist parties were set to retain a majority after the elections, but eurosceptic nationalists made the biggest gains, raising questions about the ability of major powers to drive policy in the bloc.

Making a risky gamble to reestablish authority, Macron called a parliamentary election – with the first round on June 30 – in the wake of the results. 

If the far-right National Rally party wins a majority, Macron would be left without a say in domestic affairs.

‘That is probably somewhat bad news for markets,’ said Berenberg chief economist Holger Schmieding. ‘It introduces an unexpected element of uncertainty.’

Kathleen Brooks, research director at trading platform XTB, told Reuters the ‘shock factor’ from Macron’s decision to call a snap election would weigh on European markets on Monday, but who prevailed in the actual vote might carry more weight.

‘The question for traders of the euro and European stock markets is just how radical will Marine Le Pen and Jordan Bardella be if they do well in the French parliamentary elections?’ she said, referring to two far-right leaders in France.

The gap between German and Italian debt, which investors see as a measure of risk appetite in the broader region, also widened to 137 bps.

‘Obviously, the snap election is a new source of uncertainty, which should have some negative impact on economic and market confidence, at least in France,’ said Jan von Gerich, chief market analyst at Nordea.

But he noted that EU election results do not always translate into domestic ones, due to different voting systems and as EU elections tend to attract a larger protest vote.

The drop came after the French president suffered a humiliating defeat to Marine Le Pen’s National Rally party, which took home a projected 31.5% of the vote. Pictured: Le Pen speaks in Paris on Sunday after Macron called a shock election

Members of Germany’s far-right AfD party cheers after the first exit polls were announced

Peter Cardillo, chief market economist at Spartan Capital Securities in New York, said it would take a huge surge in the far right for the euro to weaken substantially.

The European Central Bank last week delivered its first rate cut in five years and the currency is down almost 2.5% on the dollar this year, mostly driven by the relative outlooks for interest rate cuts in the euro area and United States.

In France, where concerns about the country’s high debt levels have grown, the implications of renewed political uncertainty for the economy could also be in focus.

Standard & Poor’s last month cut its rating on France’s sovereign debt, delivering a painful rebuke to the government’s handling of the strained budget days before the EU election.