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Encoding in python 2.7, from IDE to string

So here I am, I read about encoding all day, now I need some clarification.
First off I'm using eclipse mars with pydev.
Unicode is a (character set + code points), basicaly a table of symbols associated with numerical value.
The way those value are going to be stored at a binary level are defined by the encoding, let's say UTF-8.
1 : shebang
What is the shebang for? when I put # -*- coding: utf-8 -*- does it do something? or does it just indicate that my file is encoded in UTF-8 (but since it's just an indication it could be a lie :o)
2 : Eclipse file encoding
After I wrote my shebang and saved I went into the property of the file, and it said encoding : ISO-8859-1, so my guess is that the shebang does nothing beside indicate in which encoding my file is.
Do I need to manually set every files to UTF-8 or is there a way to teach eclipse to read the shebang and act accordingly.
3 : Why does the shebang only specify the encoding?
My shebang say utf-8, ok right, so what? it does not tell me which caracter set is used.
Since UTF-8 is just an encoding I could use UTF-8 with any character set no?
I could encode ASCII in UTF-8 if I wanted, since an encoding is just a way to convert and store/read code points.
What if my character set encoded in utf-8 does not have the same code points than unicode? (is this possible?)
4 : maybe a solution?
I oftenly read that utf-8 is an implementation of unicode, does that mean that each times you read encoding = UTF-8 you can be 100%, and I say 100%, sure that the characterset+code points is unicode?
I'm lost

There are multiple misconceptions in your question.
Unicode is a standard that is commonly used for working with text. It is not "character set + code points" e.g., Unicode standard defines how to find word boundaries or how to compare Unicode string.
# -*- coding: utf-8 -*- is an encoding declaration. It is not a shebang. Shebang (as it name suggests) starts with #! e.g., #! /usr/bin/env python.
You might need the encoding declaration if there are non-ascii literal characters in your Python source code e.g., you don't need an encoding declaration if you write:
#!/usr/bin/env python2
print u"\N{SNOWMAN}"
But you need it if you use literal non-ascii characters:
#!/usr/bin/env python2
# -*- coding: utf-8 -*-
print u"☃"
Both scripts produce the same output if the second script is saved using utf-8 encoding. The encoding declaration says how to interpret bytes that constitute the Python source code to get the program text.
"is there a way to teach eclipse to read the shebang encoding declaration and act accordingly." is a good separate question. If IDE has explicit Python support then it should do it automatically.
My shebang encoding declaration say utf-8, ok right, so what? it does not tell me which character set is used.
"character encoding", codepage, and charset may be used interchangeably in many contexts. See What's the difference between encoding and charset? The distinctions are irrelevant for the task of converting from bytes to text and back in Python:
unicode_text = bytestring.decode(character_encoding)
bytestring = unicode_text.encode(character_encoding)
A bytestring is an immutable sequence of bytes in Python (roughly speaking numbers in 0..255 range) that is used to represent arbitrary binary data e.g., images, zip-archives, encrypted data, and text encoded using some character encoding. A Unicode string is an immutable sequence of Unicode codepoints (roughly speaking, numbers in 0..sys.maxunicode range) that is used to represent text in Python.
Some character encodings such as cp437 support only a few Unicode characters. Others such as utf-8 support the full range of Unicode codepoints.

The right way to add the encoding declaration is > # -*- coding: utf-8 -*-
It tells python to change the encoding in the current script to UTF-8 it has nothing to do with the user .

Ok I think I found an awnser to all those questions
1/
thanks to J.Dev, the shebang only tells the python interpreter in what the file is encoded, but YOU have to encode the file in what you put in the shebang
2/
Apparently I have to do it manually
3/
Because an encoding is associated with a charset, if you say encoding=utf-8 then it will always be a unicode charset
Some old 1 byte charset don't have encoding, you don't need encoding since the char are all stored on 1 byte, the natural binary translation is the encoding.
So when you say ASCII for instance you mean the charset and encoding = ASCII
But this leave me wondering, is there other type of charset out there with multiple encoding implementation (like unicode can be encoded in utf-8/16/32)

Unsupported characters in input In Python IDLE

suffixes = {
1: ["ो", "े", "ू", "ु", "ी", "ि", "ा"]}
When I done
message given by IDLE is
Unsupported characters in input
Also not see the proper font in MS-DOS.

What encoding is your source file in?
If it is UTF8, put the comment
# -*- coding: utf-8 -*-
at the top of the file.

If you don't declare encoding in your first or second line in your python source file, then the python interpreter will use ASCII encoding system to decode the characters in the file. As these characters you used couldn't be decoded by ASCII encoding system, errors happended.
The solution is as #RemcoGerlich said. Here is the doc.
The encoding is used for all lexical analysis, in particular to find the end of a string, and to interpret the contents of Unicode literals. String literals are converted to Unicode for syntactical analysis, then converted back to their original encoding before interpretation starts. The encoding declaration must appear on a line of its own.

This seems to be a known bug in the 2.x IDLE console: http://bugs.python.org/issue15809. A fix was made for Python 3.x, but doesn't appear to be backported.
Instead, use an alternative console, such as iPython/Jupyter, or a fully-fledged IDE, such as PyCharm.

SyntaxError: Non-ASCII character '\xa3' in file when function returns '£'

Say I have a function:
def NewFunction():
return '£'
I want to print some stuff with a pound sign in front of it and it prints an error when I try to run this program, this error message is displayed:
SyntaxError: Non-ASCII character '\xa3' in file 'blah' but no encoding declared;
see http://www.python.org/peps/pep-0263.html for details
Can anyone inform me how I can include a pound sign in my return function? I'm basically using it in a class and it's within the '__str__' part that the pound sign is included.

I'd recommend reading that PEP the error gives you. The problem is that your code is trying to use the ASCII encoding, but the pound symbol is not an ASCII character. Try using UTF-8 encoding. You can start by putting # -*- coding: utf-8 -*- at the top of your .py file. To get more advanced, you can also define encodings on a string by string basis in your code. However, if you are trying to put the pound sign literal in to your code, you'll need an encoding that supports it for the entire file.

Adding the following two lines at the top of my .py script worked for me (first line was necessary):
#!/usr/bin/env python
# -*- coding: utf-8 -*-

First add the # -*- coding: utf-8 -*- line to the beginning of the file and then use u'foo' for all your non-ASCII unicode data:
def NewFunction():
return u'£'
or use the magic available since Python 2.6 to make it automatic:
from __future__ import unicode_literals

The error message tells you exactly what's wrong. The Python interpreter needs to know the encoding of the non-ASCII character.
If you want to return U+00A3 then you can say
return u'\u00a3'
which represents this character in pure ASCII by way of a Unicode escape sequence. If you want to return a byte string containing the literal byte 0xA3, that's
return b'\xa3'
(where in Python 2 the b is implicit; but explicit is better than implicit).
The linked PEP in the error message instructs you exactly how to tell Python "this file is not pure ASCII; here's the encoding I'm using". If the encoding is UTF-8, that would be
# coding=utf-8
or the Emacs-compatible
# -*- encoding: utf-8 -*-
If you don't know which encoding your editor uses to save this file, examine it with something like a hex editor and some googling. The Stack Overflow character-encoding tag has a tag info page with more information and some troubleshooting tips.
In so many words, outside of the 7-bit ASCII range (0x00-0x7F), Python can't and mustn't guess what string a sequence of bytes represents. https://tripleee.github.io/8bit#a3 shows 21 possible interpretations for the byte 0xA3 and that's only from the legacy 8-bit encodings; but it could also very well be the first byte of a multi-byte encoding. But in fact, I would guess you are actually using Latin-1, so you should have
# coding: latin-1
as the first or second line of your source file. Anyway, without knowledge of which character the byte is supposed to represent, a human would not be able to guess this, either.
A caveat: coding: latin-1 will definitely remove the error message (because there are no byte sequences which are not technically permitted in this encoding), but might produce completely the wrong result when the code is interpreted if the actual encoding is something else. You really have to know the encoding of the file with complete certainty when you declare the encoding.

Adding the following two lines in the script solved the issue for me.
# !/usr/bin/python
# coding=utf-8
Hope it helps !

You're probably trying to run Python 3 file with Python 2 interpreter. Currently (as of 2019), python command defaults to Python 2 when both versions are installed, on Windows and most Linux distributions.
But in case you're indeed working on a Python 2 script, a not yet mentioned on this page solution is to resave the file in UTF-8+BOM encoding, that will add three special bytes to the start of the file, they will explicitly inform the Python interpreter (and your text editor) about the file encoding.

Python Encoding issue

Why am I getting this issue? and how do I resolve it?
UnicodeDecodeError: 'utf8' codec can't decode byte 0x92 in position 24: unexpected code byte
Thank you

Somewhere, perhaps subtly, you are asking Python to turn a stream of bytes into a "string" of characters.
Don't think of a string as "bytes". A string is a list of numbers, each number having an agreed meaning in Unicode. (#65 = Latin Capital A. #19968 = Chinese Character "One"/"First") .
There are many methods of encoding a list of Unicode entities into a stream of bytes. Python is assuming your stream of bytes is the result of a particular such method, called "UTF-8".
However, your stream of bytes has data that does not correspond to that method. Thus the error is raised.
You need to figure out the encoding of the stream of bytes, and tell Python that encoding.
It's important to know if you're using Python 2 or 3, and the code leading up to this exception to see where your bytes came from and what the appropriate way to deal with them is.
If it's from reading a file, you can explicity deal with the bytes read. But you must be sure of the file encoding.
If it's from a string that is part of your source code, then Python is assuming the "wrong thing" about your source files... perhaps $LC_ALL or $LANG needs to be set. This is a good time to firmly understand the concept of encoding, and how text editors choose an encoding to write, and what is standard for your language and operating system.

In addition to what Joe said, chardet is a useful tool to detect encoding of the source data.

Somewhere you have a plain string encoded as "Windows-1252" (or "cp1252") containing a "RIGHT SINGLE QUOTATION MARK" (’) instead of an APOSTROPHE ('). This could come from a file you read, or even in a Python source file of yours; you could be running Python 2.x and have a # -*- coding: utf8 -*- line somewhere near the script's beginning, or you could be running Python 3.x.
You don't give enough data; however, somewhere you have a cp1252-encoded string, which you try (explicitly or implicitly) to decode to unicode as utf-8. This won't work.
Give us more info, and we'll try again to help you.
Joe Koberg's answer reminded me of an older answer of mine, which some people have found helpful: Python UnicodeDecodeError - Am I misunderstanding encode?

How do I regex search for weird non-ASCII characters in Python?

I'm using the following regular expression basically to search for and delete these characters.
invalid_unicode = re.compile(ur'(Û|²|°|±|É|¹|Í)')
My source code in ASCII encoded, and whenever I try to run the script it spits out:
SyntaxError: Non-ASCII character '\xdb' in file ./release.py on line 273, but no encoding declared; see http://www.python.org/peps/pep-0263.html for details
If I follow the instructions at the given website, and place utf-8 on the second line encoding, my script doesn't run. Instead it gives me this error:
SyntaxError: (unicode error) 'utf8' codec can't decode byte 0xdb in position 0: unexpected end of data
How do I get this one regular expression running in an ASCII written script that'd be great.

You need to find out what encoding your editor is using, and set that per PEP263; or, make things more stable and portable (though alas perhaps a bit less readable) and use escape sequences in your string literal, i.e., use u'(\xdb|\xb2|\xb0|\xb1|\xc9|\xb9|\xcd)' as the parameter to the re.compile call.

After telling Python that your source file uses UTF-8 encoding, did you actually make sure that your editor is saving the file using UTF-8 encoding? The error you get indicates that your editor is probably not using UTF-8.
What text editor are you using?

\x{c0de}
In a regex will match the Unicode character at code point c0de.
Python uses PCRE, right? (If it doesn't, it's probably \uC0DE instead...)