French election shock sparks euro slip after victory for the left

The euro fell 0.3% in the early hours of Asian trading on Sunday after France's New Popular Front party emerged victorious in the country's legislative elections.

The latest projection on Monday morning suggested the left-wing New Popular Front alliance had won 182 of the 577 seats in the National Assembly.

Incumbent President Macron's centrist alliance, meanwhile, is set to take 168 seats. The result marks a humiliating defeat for the Ensemble group, and one which has sparked the resignation of Prime Minister Gabriel Attal.

While markets had recently rallied on the belief that the right-wing National Rally was not set to take an absolute majority in France, market uncertainty looks set to return.

The far-right RN is only predicted to secure 143 seats after Sunday's vote, although investors now have new faces to fret over.

"It looks like the anti-far right parties really got a lot of support," said Simon Harvey, head of FX analysis at Monex Europe, cited by Reuters.

"But fundamentally from a market perspective, there’s no difference in terms of the outcome. There’s really going to be a vacuum when it comes to France’s legislative ability."

Markets notoriously hate uncertainty, and France's political scene is currently far from stable.

With the likelihood of a hung Parliament and little clarity as to what form of coalition might be possible, some form of minority government or 'cohabitation' - where power is shared between a prime minister and a president from opposing parties - appears likely.

This could presage legislative gridlock.

Added to this, the leftist New Popular Front (NFP) alliance is not known for its fiscal caution.

As early as this summer, leader Jean-Luc Mélenchon has said that decrees could be issued to repeal