French politics drive the cost of buying Euros

Following the developments in France over the weekend the Euro has gained in significant value. Last week there were 11 candidates polling to get through the first round of the elections.

The concern for the market last week was the potential that none of the traditional parties would get through to the second round, that being potentially a Green party and a UKIP party being the only choice available.

On the news on Sunday that Emmanuel Macron, who has been called the next generation of President Holland, has got through many think it will be an easy win for him. To try and compare it would be the Green Party against the Conservatives potentially based on popularity. This new confidence that there will be a well-known and widely understood president in place resulted in the gain in the value of the Euro.

How their final few campaigning days go will quickly change the likelihood of who will win and the currency market will move incredibly quickly to reflect any change. The statistics and polls in France still suggest large amount of voters are undecided, especially within the young so a surprise here with a Le Pen win would certainly result in GBP/EUR rates spiking highly. This however remains very unlikely and a Macron win is widely expected which would probably result in GBP/EUR levels falling down towards 1.15 I would expect. Make sure to review your situation prior to this event in the next 10 days.

The below table shows the difference received when buying from the high against the low for GBP/EUR.
[tables]

Sterling Euro at 9 month high

ECB QE update pending

Later the European Central Bank and Mario Draghi give their latest economic update on the strength of the Eurozone. Draghi is traditionally very Euro positive with his statement and press conference which follows and I expect no different today.

The Eurozone’s trade balance figures have turned to a surplus in February which further suggests the recovery in the bloc is gaining momentum.

The latest purchasing managers’ data from Germany showed that their economy remains near a six-year highs in April. Add to that figures recently which suggest that construction activity across the Eurozone rose at the fastest pace of growth in almost five years it seems very likely that this will be a Euro positive day resulting in buying anything in Europe more expensive when compared to this morning.

Generally I expect GBP/EUR levels, which are near a 7 month high, to remain under pressure going forward. I see rates falling by several cents over the coming weeks due to the economic releases expected, UK data and the French election result. As a result if you have Euros to buy within the next 4 weeks I personally would be moving sooner rather than later. Call our team today on 01494 725 353 or email me here if you are yet to trade with us and would like to speak with someone regarding a transfer.

The information on this web site is provided free of charge for information purposes only. It does not constitute advice to any person on any matter. Foreign Currency Direct plc. ("FCD") makes every reasonable effort to ensure that this information is accurate and complete but assumes no responsibility for and gives no warranty with regard to the same.

News

Read more articles
Exchange rates on this page are interbank rates and indicate where the market is trading to show the performance of a currency pair. They are not indicative of the rates which we offer. The information on this web site is provided free of charge for information purposes only. It does not constitute advice to any person on any matter. Foreign Currency Direct plc. ("FCD") makes every reasonable effort to ensure that this information is accurate and complete but assumes no responsibility for and gives no warranty with regard to the same.