Excel Currencies Blog

Whilst the Pound is down 0.5% versus the Euro since Marine Le Pen's election victory, the pair remains 1% above 2024's average and over 2% up on the year so far. There is potential for more 'slides' this month and even this week depending on how the UK general election plays out. 

Usually, Sterling is very sensitive to political uncertainty and always faces an uphill battle when a big event is imminent. However, I have to say this is the most stable I have seen the Pound when faced with such an event for 15-years. A victory for either Starmer or Sunak looks a safe bet on financial markets and so the UK general election could be a 'non-event' as far as GBP is concerned (unless a hung parliament scenario). 

The French election on the other hand will and already has influenced the Pound and what happens this week will impact where the £-€ rate is headed near-term..



EUR
The Euro has gained in value since Marine Le Pen's victory was announced yesterday. National Rally (RN) won 33% of the vote, which was 3% lower compared to what the polls had them at. A majority can still be won come Sunday, but the most likely outcome now is a 'hung' legislation. 

The reason this is relief for the Euro is the uncertainty over what a 'right-wing' (or a 'left-wing' with New Popular Front who won 29%) Government looks like. France's debt is spiraling and dramatic change brings uncertainty. Traders would get nervous over what happens next with France, their position in the EU and this would weaken the €. 

Elsewhere, the Euro-Zone is posting its latest inflation figures and ECB President Lagarde has a couple of speeches lined up that should create some market movement. 



USD
We have a busy week for all those involved in GBP v USD, as the US posts some important economic data. The highlight comes Friday with the non-farm payrolls report, but before then, we have PMI figures and speeches from Fed Chair Powell that will no doubt create some volatility.