EUR/GBP breaks out of consolidation, French elections in focus

• EUR/GBP is back into the 0.8350s following a fade of the opening gap. 
• French elections have been in focus, Macron leads.

EUR/GBP is 0.16% higher on the day so far after running up to test 0.8373 at the start of the day due to the market's favouritism towards the incumbent French President Emmanuel Macron who is leading in the polls of the presidential elections.

• French elections: Macron leads 54% to le Pen 46%, EUR likes it

''I'm ready to invent something new to gather diverse convictions and views in order to build with them a joint action," he said. He vowed to "implement the project of progress, of French and European openness and independence we have advocated for."

Meanwhile, as the dust settles, the focus will switch back to monetary policy at the European Central Bank that meets on 14 April.

''We expect a dramatic shift from the ECB, with the announcement of an early end to QE (in May) and setting the groundwork (but not quite committing to) a June hike via a change to its forward guidance (yet again),'' analysts at TD Securities said. ''Inflation has jumped well above where the ECB thought it would be just one month ago, and the ECB has said it would adjust the APP to reflect major shocks.''

As for the pound, it can draw support from the OIS pricing that continues to embed 5+ rate hikes by the end of this year by the Bank of England. However, the Deputy Governor, Jon Cunliffe, remains at the dovish end of the spectrum and recently said that “while I recognize the risk of second-round effects and that further tightening of monetary policy might be necessary, I am not at present convinced that we will inevitably have to lean heavily and constantly against an embedding of an inflationary psychology as we progress through this challenging period and as the impact of higher commodity prices on real household incomes depresses activity.” Nevertheless, he was the lone dissent last month in favour of steady rates so his comments shouldn't be too surprising.