With the French elections now fast approaching the Euro could come under pressure as markets prepare for a potential Marine Le Pen victory.
The Euro received a boost yesterday after Unemployment fell to its lowest level in almost 8 years in February, dropping from 9.6% in January to 9.5%. The lowest rates were seen in the Czech Republic and Germany, while the highest rates were seen in Spain and Greece. Another survey from IHS Markit yesterday also showed that the Manufacturing Purchasing Managers Index (PMI) rose from 55.4 in February to 56.2 last month suggesting growth in the Eurozone Manufacturing sector.
With the French elections just around the corner, banks in France are beginning their preparations in the event that Marine Le Pen fairs better than expected. The current opinion polls are showing that she has a good chance of winning the first round with a projection of 25-30%, but predict that the final vote on May 7th will be won by Emmanuel Macron.
Banking Investors and Regulators are wary after the surprise votes last year, including Brexit and Donald Trump, and concerns are mounting that Le Pen would call a ‘Frexit’ referendum should she win. Not only that, but she has made it clear that she intends to halve the rates that banks are able to charge clients and force banks to lend to small firms too.
The French election is something to strongly take into account if you are planning on a Euro transfer over the coming months. On the day of the UK Referendum, the result which was unexpected by many, meant that GBP/EUR fell by 10 cents in a matter of days, making a €200,000 transfer over £20,000 more expensive. If the unexpected happens once again, the Euro could weaken to the same extent, making it significantly more expensive to buy Pounds with Euros, therefore outlining your future requirements can enable us to put together a plan which best works for you.
Looking at the week ahead, Investors will be keenly watching the latest ECB meeting on Wednesday at 8am, followed by Markit Services PMI data for March which is released at 9am. If the Services sector performed well in line with the Manufacturing sector in March we could see further Euro strength tomorrow morning. Any clients looking to buy Euros with Sterling in the near term may wish to move before this event to take advantage of the current levels.
If you have a Euro buying or selling requirement in the coming weeks or months, be sure to stay in touch with your broker to ensure you do not miss out on any potential changes in the market. Call us on 01494 725 353 or alternatively, email me here for more information.
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