French Election gives Euro a boost

24 April, 2017

Tom Arnold

Over the weekend the French people voted in the first stage of their Presidential election and as many pollster had predicted Emmanuel Macron and Marine Le Pen won through to the second round of voting which will take place in two weeks’ time to finally decide who will become the new French president.

This result of the first round caused the Euro to massively strengthen – by two cents in a matter of minutes against both the Pound and the US Dollar. The reason for this is that Macron is very conventional and EU centric and it had been suggested before the voting began that he is likely to beat any of the other candidates if he gets through, as he is the most likely to garner support from his now eliminated opponents, i.e. a left-wing voter who was supporting Jean-Luc Mélenchon, is now more likely to vote for Macron in the second round rather than far-right candidate Le Pen. Macron is therefore viewed as a stabilising influence on French politics and likely removes any threat of France have a Frexit referendum, and therefore supports the recently ailing Euro.

As it is not guaranteed that Macron wins, you can expect there to still be a certain amount of negative pricing-in affecting the Euro. As such if you have a Euro requirement you likely have a window of a couple of weeks during which the Euro will remain under some pressure before another likely surge, assuming Macron wins. You might think that you have missed the boat with the two cents you have lost over the weekend, but this could easily be repeated if Macron does win and so you are probably best to consider locking in your rate while still close to recent highs.

Following this election result the week ahead is quiet to start, but much busier towards the end, as a raft of critical data is due. At home the highlight will be UK GDP on Friday, alongside the ongoing general election campaigning; in Europe fallout from the French election and new polling will be critical, as well as the ECB’s policy announcement on Thursday; and in the US jobless claims on Thursday and GDP on Friday are worth monitoring.

UK House Price Index – Rightmove
German Economic Survey

UK Public Sector Net Borrowing
US Home Sales and House Price Index

Australian CPI Inflation
US Mortgage Approvals

UK House Price Index – Nationwide
UK Consumer Confidence Survey
German Consumer Confidence Survey
German CPI Inflation
ECB Interest Rate Decision and Statement
US Jobless Claims
US Durable Goods Orders

German Retail Sales
UK Mortgage Approvals
European CPI Inflation

If you do have an upcoming Euro requirement, then it is well worth getting in touch with your Currency Index account manager to be kept informed of what Is happening and more importantly the options that are open to you to enable you to secure your rate before any further Euro surges.