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Macron wins french election – pound stays stable

A boost for European markets from France was not enough to drive sterling past $1.30 this morning, with the British currency trading in tight ranges as domestic attention focused on this week’s Bank of England meeting and an accelerating election campaign.

The pound has gained more than 3 percent since Prime Minister Theresa May called a surprise early national vote three weeks ago for June 8, reflecting hopes among investors it will give her a stronger hand to compromise in Brexit talks.

Yet that recovery has stalled in the past week, even as May’s Conservatives won a decisive victory in regular local council elections on Thursday.
That hints at the scale of doubts that remain on how the UK economy will deal with a historic break from Europe and what are widely expected to be volatile talks on the terms, whatever the outcome of next month’s vote.

The Bank of England meets on Thursday, with analysts expecting it to have drawn some comfort from sterling’s rise over the past month.

The Bank surprised markets earlier this year by delivering a hawkish message on the chances of rises in interest rates, generally read as reflecting concern that further falls for pound would boost inflation and weaken consumer spending power.

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