Macron may have one the Presidency, but he faces a huge challenge in securing the majority in the National Assembly. If he fails to live up to his expectations, we may see the Euro weaken further against the Pound. The below table provides Pound to Euro exchange rate movements for the past 30 days.
|Currency Pair||% Change||Difference on £200,000|
On Sunday night, it was confirmed the wave of populism did not reach the shores of France as Macron won the second and final round of the French Presidential Election with a majority of 66.1%. However, there will be no honeymoon period for President-elect Emmanuel Macron as June 11th brings the start to the elections of France’s lower and principal house of Parliament, the National Assembly (575 seats).
Working in a similar fashion to the Presidential elections there will be two rounds of voting, with the second taking place on 18th June for seats not won in the first by an outright majority.
Recent polls by Opinionway have estimated Macron to claim 286 seats in the National Assembly election, falling just shy of the 288 needed to hold an absolute majority in the lower house. Followed by the Republican party at 210 (currently 194) and National Front at 40 seats (currently 2).
The outcome to the French Parliamentary elections will be the first test for Macron since winning the Presidential election, determining the power of the party during his term and the extent to which he can push his labour market reforms and pro-business approach through Parliament. I believe winning an overall majority in the upcoming elections could see GBP/EUR weaken significantly in the short term to mid 1.16 levels, whilst a failure to live up to expectations could be the boost the Pound has needed in order to break the key 1.20 resistance level for GBP/EUR.
Later this week on Friday, we see major economic data releases for the engine room of the Eurozone, Germany in the form of consumer price index figures for April and gross domestic product for Q1 released outside of trading hours at 6:00am.
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