Euro investors continue to exercise caution around the French elections and whilst Macron is expected to win by a large majority, markets are not overlooking a Le Pen victory given the surprise victory for Brexit and Trump.

Potential Le Pen victory could cause the Euro to weaken further

The Euro has made gains over the past 24 hours against its Sterling counterpart, as the markets digest the results from the first round of the French elections. With Macron and the far-right Le Pen (who last night stepped down as leader of her National Front party to concentrate solely on the Presidential race) sharing the spoils, they will now go head to head for the French Presidency. The upcoming campaign battle will be followed closely by investors and is likely to have a significant impact on Euro exchange rates.

ECB Quantitative Eaasing cut could be put on hold

The Euro was under pressure last week and dropped to a low of 1.1976, following UK Prime Minister Theresa May’s shock announcement that the UK government was calling a snap election in June. The Pound's gains inadvertently caused the Euro to weaken, alongside the Le Pen fear factor.

The single currency did find support under 1.20, although I am not anticipating a major recovery for the Euro under current conditions.

Despite the fact future negotiations regarding how the UK will facilitate its exit from the EU will no doubt have an effect on GBP/EUR rates, the level of uncertainty has shrunk and investors will now start to refocus on other economic factors, which could be to the detriment of the single currency over the coming months.

With so much economic and political uncertainty across the Eurozone region are you prepared to gamble on a seismic shift in market conditions, which would be needed to significantly boost the Euros value in my opinion.

Personally, I would be looking at the current levels for Euro sellers as attractive, certainly when you consider the history of GBP/EUR rates.

As such I wouldn’t be gambling on another spike back towards 1.15 with so many negative variables to consider, including Greek debt and the German elections later this year.

Key Eurozone data

Looking ahead and like the UK, economic data for the Eurozone is fairly sparse this week.

Investors will look to Thursday, which is by the far the busiest day. Clients with a Euro requirement should expect increased market volatility later this week and prepare accordingly.

Key Consumer, Business & Industrial Confidence figures are released, which give investors an insight into the current sentiment surrounding the three key sectors of the Eurozone economy. With mixed results expected, it will be interesting to see whether the markets factor in any downturns over the coming days.

Thursday also sees the latest European Central Bank (ECB) interest rate decision and subsequent statement. Whilst we expect rates to be kept on hold at 0%, any indication of future rate fluctuations is likely to have an instant impact on the Euros value.

This is followed by inflation data on Friday and with an increase expected on last month’s figures, we could see the Euro finish the trading week strongly.

If you have an upcoming Euro buying or selling requirement, registering your interest is free and a quick phone call could make a big difference to your transfer. Our team can be reached on 01494 725 353 or alternatively. you can email me personally here.

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