The headlines over the weekend were dominated by the European election results, which caused plenty of controversy across the EU bloc.
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Like the pound however, the euro remained relatively docile against most of the major currencies, as investors are seemingly waiting to analyse the ensuing fallout from these results, before making their next decisive move.
Despite the UK’s decision to exit the EU, it was forced to take part in the elections due to the failure by the current government to facilitate Brexit under its original timeline. With that in mind, it may not have been a surprise to see the UK’s governing party suffer heavy losses obtaining only 8.7% of the vote. The Conservatives languished behind Labour, the Liberal Democrats, the Green Party and the Nigel Farage led Brexit Party which gained the most support with 31.7% of the vote.
The euro did make some small gains against the pound following these results with the interbank rate gaining just under half a cent and moving the pair back towards 1.13.
Despite Labour gaining more support than the Tories, they themselves lost considerable ground with a major embarrassment for the Labour leader Jeremy Corbyn being that his own constituency of Islington voted in favour of the Liberal Democrats. The considerable losses have led to growing pressure from his own party to outwardly support a second referendum. The results indicate what many already knew, that there is still a huge divide in the UK over whether to pursue Brexit or not.
Looking across Europe the results offer varying insights into the current public outlook. Despite the nationalist parties performing well in the UK, France, Italy & Hungary, their overall support fell short of the very significant gains many had predicted.
Pro-EU parties continue to hold the majority of seats but there was an obvious shift with the socialist & conservatives no longer holding a clear majority.
Whilst the far-right failed to make inroads across the whole of Europe, Marie le Pen proved in France that the anti-immigration parties still hold weight defeating French Leader Emanuel Macron in the polls.
Whilst the EUR value was not directly impacted by this result, the longer-term ramifications of a far-right uprising across the EU could potentially have an effect on the EUR value.
Looking ahead, today’s Consumer & Industrial Confidence figures are the main releases to keep an eye on. With economic data light this week, expect the markets to focus on the weekend’s election results and any ensuing fallout.
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