Crypto News: 5 things to start your day: Europe

Good morning. As the UK election looms, apparently only the scale of a Tory defeat is in doubt. French political parties are scrambling ahead of a second round of voting. And London rents are easing. Here's what people are talking about.

Boris Johnson made an unexpected campaign appearance on Tuesday night to urge Conservative voters to deny Labour a landslide victory at the UK general election, a last throw of the dice by Rishi Sunak's Tories to try to prevent huge losses that are expected at Thursday's vote. The former premier repeated Tory campaign attack lines claiming Labour leader Keir Starmer would use a "super-majority" to put up taxes and allow uncontrolled immigration, allegations the opposition party denies. The comments come as UK opinion polls remain remarkably consistent: The opposition Labour Party is projected to win, and Starmer will be Britain's new prime minister. Where polls differ is on the scale of victory, and whether Rishi Sunak's Conservatives face an existential threat after 14 years in power. We look at possible scenarios — including some wildcards and also where the parties' policies differ and where they align. And Mark Cranfield looks at what this could mean for the pound in his musings below.

The European Central Bank doesn't need services inflation — a key focus as policymakers determine how much to lower interest rates — to slow to the 2% target, according to President Christine Lagarde. "Obviously, we don't need to have services at 2% because manufacturing goods are below 2% and at the end of the day it's going to be a balance between goods and services," she told a panel Tuesday in Sintra, Portugal. "But we have to look really what is behind it," she said. "And what's behind it is a lot of wages. Services has a very high component of labor. Wages also suffer from the lag impact of the labor system." While in the US, Federal Reserve Chair Jerome Powell said the latest economic data suggest inflation is getting back on a downward path, but emphasized officials need more evidence before lowering rates.

French bonds gained with the nation's 10-year yield premium over safer German peers falling to 71 basis points on Tuesday, the tightest on a closing basis since June 13. The move came as Marine Le Pen's National Rally tries to outmaneuver rivals that are pulling out well-worn tricks to keep the far-right out of power in the final round of legislative elections on Sunday. In what has become something of a French game of chess, the opposition to Le Pen — President Emmanuel Macron's centrist group and a left-wing alliance — is racing to coalesce and pull out candidates to shut her own people out. Le Pen, by turn, is trying to court supporters to back her.

Traders in the $27 trillion Treasury market are betting on higher long-term bond yields as Wall Street starts to adjust for Donald Trump's potential return to the White House. President Joe Biden's favorability numbers have plummeted after his debate performance last week in "the largest single-week drop" in nearly three years, according to a leaked memo from a pollster that was published Tuesday by the news site Puck. Biden's campaign has pushed back on calls from Democrats for him to step aside and allow another candidate to take on Trump. Further muddying the waters, the former president's sentencing in his New York hush-money case was delayed two months until Sept. 18 so the judge can review the impact of a landmark US Supreme Court ruling about presidential immunity.

London's home rental crisis showed early signs of easing after a surge in available properties led to the joint-smallest increase in advertised rents across Britain. The online property portal Rightmove said rents in the capital rose 4% from a year ago in May. The average remained at eye-watering level of £2,652 ($3,355) a month. It matched the slowest year-on-year growth among the UK regions with only Wales seeing a similarly small rise. It also was slower than the pace of wage increases, a sign that a brutal cost-of-living squeeze is easing.

In a busy economic lineup we will be watching Turkey CPI along with PMIs from Spain, Italy, France, Germany, the euro zone and the UK. And from the US, we get composite and services PMIs, trade balance and initial jobless claims. Central bank speakers include the ECB's Guindos, Cipollone, Knot and Lane, as well as the Fed's Williams.

This is what's caught our eye over the past 24 hours.

HSBC reins in hiring, banker travel in cost-cutting push
Brevan cuts fees for biggest fund to make up for high costs
London, Paris, Seoul show commuting power of fast regional rail
BlackRock introduces new CO2 policy for $150 billion of funds
China can end war in Ukraine with one phone call, Finland says
Skydance is said to reach Paramount merger agreement
US allies allege China is developing attack drones for Russia

Early hurricanes in the Atlantic could be a metaphor for what lies ahead for the pound if there is a surprise outcome from UK elections this week.

GBP/USD has been quietly meandering for several weeks as investors seem convinced there will be aclean change of UK government, avoiding a hung parliament. However, the ongoing French elections are a reminder that financial markets can't afford to be complacent in pricing for a non-event.

And the pound certainly knows how to liven up foreign exchanges at short notice. In the period since the Brexit vote in 2016 there have been a few spectacular collapses for sterling, which include the dive to a record low during the Liz Truss fallout.

Moreover, GBP/USD implied volatility is also subdued, which shows there is a plenty of room for a big reaction should the election results spring a surprise.

Mark Cranfield is a macro strategist for Bloomberg's Markets Live team based in Singapore