EUR to GBP Exchange Rate Surges on Macron?s First Round French Election Win

April 24, 2017 - Written by Ben Hughes

STORY LINK EUR to GBP Exchange Rate Surges on Macron?s First Round French Election Win

When markets opened on Monday morning, the Euro surged as investors scrambled to buy it following the results of Sunday’s French vote. The first round of France’s Presidential election ended with pro-EU Emmanuel Macron in first, giving the Euro to British Pound exchange rate a huge boost.

EUR/GBP plunged from 0.8474 to 0.8368 last week, losing a cent when it was confirmed that Britain would have a general election on the 8th of June. The pair even hit a 2017 low of 0.8339 last Wednesday.

However, so far this week has seen EUR/GBP reverse those losses. EUR/GBP fluctuated between a high of 0.8507 and 0.8456 on Monday morning.

Sunday’s first round of the French Presidential election went as markets hoped, and as some pollsters expected.

After last year’s unexpected Brexit and Trump votes, investors were pleasantly surprised when the first round of the French vote put all four most popular candidates close to their projected polling figures.

Pro-EU centrist Emmanuel Macron attainted 23.8% of the vote while anti-EU far-right Marine Le Pen came in second with 21.5%. Both will go head to head in the second round on the 7th of May.

Pro-EU conservative François Fillon and anti-EU far-left Jean-Luc Mélenchon also performed closely to poll projections with about 19% each.

The possibility of a ‘Frexit’, which has been part of both Le Pen and Mélenchon’s campaigns, has been a major concern for global markets since the beginning of the year. It has limited the Euro’s gains despite solid economic data from the Eurozone.

France is one of the biggest and most influential economies in the Eurozone. If France were to leave the bloc, the currency itself may collapse or enter a long-term crisis.

However, Macron met polling projections and won the first round of the election, increasing hopes that he will meet second round polling projections too. Most second round opinion polls give Macron over 60% of the vote against Le Pen, so investors are optimistic.

The Pound has seen little in the way of influential news since last week’s UK election announcement and disappointing UK retail sales data for March.

Demand for Sterling is still solid. EUR/GBP has been unable to hold its best levels as investors remain optimistic towards Britain’s upcoming general election. Hawkish comments from Bank of England (BoE) policymaker Michael Saunders have also supported the Pound.

Eurozone and UK consumer confidence reports will be published throughout this week, but the main events are likely to be Thursday’s European Central Bank (ECB) policy decision, as well as Friday’s Q1 2017 Gross Domestic Product (GDP) stats for Britain.

With investors now more optimistic about the French election the Euro to Pound exchange rate’s movement is likely to be a little more bias to the upside overall. Concerns remain that Le Pen could win the second round, but these have lightened since last week.

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