LONDON, June 13 Reuters The pound was headed for its fifth weekly gain against the euro on Thursday, having hit its highest in almost two years against the single European currency, which was rattled by political uncertainty in France.

The euro fell to its lowest against the pound since late August 2022 this week, after the success of farright parties in a European Union parliamentary election at the weekend prompted French President Emmanuel Macron to call a snap vote in his country, which spooked investors.

The pound was already in the ascendant against the euro, which is already up almost 2.5 in value so far this year, mostly based on the expectation that UK rates will remain above those in the euro zone for some time to come.

On Thursday, sterling was last flat against the dollar at 1.2798 and steady against the euro at 84.44 pence.

Data on Wednesday that showed U.S. inflation cooled more quickly than expected in May prompted a selloff in the dollar, boosting sterling 0.5. The selloff slowed after the U.S. Federal Reserve released its projections for interest rates, growth and inflation.

On Thursday, the pound offered little reaction to the opposition Labour party39;s manifesto, released ahead of the July 4 general election.

Data this week has painted a fairly stagflationary picture for the British economy, with wage growth still running hot, while economic growth had completely stalled in April.

Traders expect at least one rate cut from the Bank of England…