Sterling on track for biggest daily rise vs euro in months

The euro was on track for a ​sixth straight daily loss against sterling on Monday, its ​sharpest decline since mid-July, as concerns about ‌France's ​fiscal outlook continued to weigh on the single currency.

Sterling edged up against a strong dollar, buoyed by the British government's commitment to fiscal discipline and a ‌more constructive approach to the European Union. Prime Minister Andy Burnham, who campaigned to stay in the EU in a 2016 referendum on membership, has said the nation should again consider its options, including rejoining the bloc.

The euro slid to ‌a 17-month low against the dollar as concerns about France's ability to rein in its budget deficit stirred ‌fears of a return of sovereign debt crisis dynamics in the euro zone. The single currency dropped 0.41% — the biggest decline since July 15 — to 84.60 pence, the lowest level in almost three months.

The pound jumped in mid-July on expectations that Burnham, who became prime minister that ⁠month, ​would pick a fiscally conservative finance ⁠minister. Energy prices, the Middle East conflict and their impact on the economy remained under the spotlight. Brent crude futures fell on Monday ⁠as rising Middle East crude exports and a release of oil stocks by the Group of Seven nations boosted supplies.

The pound ​has risen since early last week, as remarks by Bank of England Governor Andrew Bailey and ⁠Deputy Governor Dave Ramsden supported expectations for tighter monetary policy. Analysts said markets have yet to turn their attention to the October 28 UK budget.

“Chancellor (John) ⁠Healey ​faces a difficult task on October 28 but the situation on the other side of the Channel suggests that sterling is less vulnerable to a selloff versus the euro than it would be otherwise,” Jane Foley, ⁠senior forex strategist at Rabobank, said. Barclays wrote in a research note the pound was among the key beneficiaries from ⁠the widening in French ⁠spreads last week.

In a separate European development on Monday, Spanish Prime Minister Pedro Sanchez called a snap election in a bid to strengthen his mandate after a fragmented ‌parliament rejected key government ‌housing decrees last week amid widespread protests.