After the surprising political twists of 2016 there was a lot of uncertainty in the build-up to the election. Fears that Marine Le Pen could triumph initially kept the euro under pressure. Her campaign focused on emotive issues of immigration and national security, her desire to hold a referendum on French membership of the EU and plans to remove France from the euro zone.
However, while she made it through to the second round, polls showing that Emmanuel Macron would ultimately win by a significant margin meant euro exchange rates jumped.
As the outcome of the final round of the French election was expected ahead of time, the currency market’s initial reaction to Macron’s victory was quite muted but since then the euro has been steadily edging higher, and EUR/USD jumped to its best levels since Donald Trump was voted US President.
In his first few days in office Mr Macron gave the euro another boost by appointing Conservative Edouard Philippe Prime Minister and selecting a diverse cabinet based on European unity and gender parity, with a mixture of left and right wingers.
However, while hopes for stability and strength under Macron are lending the euro support, concerns about his views on Brexit could spell trouble for the pound. During his campaign, Macron famously described Brexit as a ‘crime’. After meeting Theresa May earlier in the year he also told reporters in Downing Street; ‘I am very determined there will be no undue advantages.’
If he takes a hard-line stance during Brexit negotiations and tries to prevent Britain securing a lucrative trade deal, fears for Britain’s long-term economic outlook could send Sterling spiralling lower.
Question answered by Pippa Maile of Currencies Direct. For more information on international money transfers with Currencies Direct see www.currenciesdirect.com/france or call +33 (0)4 22 32 62 40
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