The upcoming French elections has not resulted in any particular Euro weakness, which implies that markets are not expecting a Le Pen victory to unfold.
The French election is becoming a much closer race than we previously thought and could give some excellent opportunities for well-prepared Euro buyers.
Whereas Le Pen and Macron the two front-runners were polling at near 30% each they now share 24% of the vote. This is following a late burst from Fillon and socialist Melenchon now both at close to 20%.
Whilst the polls have been so wrong in recent years they are the best information we have and it is looking very clear that no candidate will win over 50% in the first round on the 23rd April, thereby forcing the final run-off on May 7th.
If the Euro weakens only a couple of cents, Euro buyers with Pound would have a very unique opportunity here to buy Euros at some of the best rates since the Referendum. So long as sterling continues to keep its head above water, the next couple of weeks could see GBP/EUR rates improve for Euro buyers.
The general expectation is Le Pen will make it through to the second round but she will then lose. Euro weakness should track Le Pen’s likelihood of winning so if you have a transfer buying Euros making some plans around this important event is vital.
This week is fairly light on new information from the Eurozone economy although we do have Industrial Production data and a European business survey at 10am today. It seems the GBP/EUR rate will be driven more by movements on the Pound although there could be further news on the Brexit plans which would also influence this currency pair.
One important piece of news recently was regarding Greece who did on Friday make some progress with creditors in regards to cuts on pensions. The big challenge will now be on tackling budget surplus targets and debt relief but this has paved the way for Greece to unlock more funds. This is all before a July deadline which could easily unsettle the Euro later in the year. As with recent years we may not have to wait until the deadline for investors to become nervous, this could be a strong reason for Euro sellers to think twice before waiting for big improvements.
Euro buyers and sellers might wish to be very carefully considering their positions as the latest trends on GBP/EUR take shape. If you have a transaction buying or selling Euros, the next 2-3 weeks will potentially be a very volatile time so please make sure you have highlighted your position and any plans to your account manager by calling 01494 725 353.
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