LONDON: The pound slipped against the euro on Monday as the single currency rallied on investor expectations that France’s far right party might not secure an outright majority after winning the first round of a national election.

The euro was up 0.27% against the pound at 84.97 pence, climbing further away from a two-year low of 83.97 pence hit in mid-June. The common currency climbed around 0.5% against the dollar.

Marine Le Pen’s far-right Rassemblement National (RN) won the most votes in the first round of France’s parliamentary election on Sunday, with President Emmanuel Macron’s grouping in third place behind a left-wing coalition.

Yet the final outcome will depend on days of alliance-building before next weekend’s second round of votes. Market analysts said RN fared slightly less well than expected and that a hung parliament seemed the most likely outcome, limiting some fears about the party’s high-spending fiscal policies.

“This morning markets mostly breathe a small sigh of relief as Rassemblement National did not get as much support as some polls had suggested,” said Bas van Geffen, senior macro strategist at Rabobank.