Emmanuel Macron, the youngest French President in history faces some huge challenges in the first weeks of his Presidency. As a pro-EU politician, it was widely anticipated that a win for Macron would boost the Euro but in fact, markets must now digest the possibility that he might not secure a majority in the National Assembly.
Macron has a lot to live up to, an inexperienced President who for now, has kept Marine Le Pen away from the Presidency but knows that France is in a vulnerable state. If he is to live up to the wishes of the French people, securing a majority in the National Assembly will be of utmost importance.
Even as a Pro EU politician, on a number of occasions he has spoken out against the Union, which remains slow to change in the wake of growing fears over terrorism. A problem which some in France put down to the issue of open border policies.
Can Macron pull off what the other traditional parties couldn’t? So far Euro investors have their doubts, and unless he secures a majority vote these doubts could continue to drive the Euro lower.
Labour in tatters, markets find safety in strong Conservative Government
Next month the UK will hold a snap election which current trends suggest will result in a landslide for the Tory Government. May wants to strengthen her hand towards the Brexit negotiations, and markets want a Government that will bring stability and certainty. It may not be the type of Brexit they were hoping for, but at least they know the position set out by the PM.
Super Thursday: A big day for the Pound
Super Thursday will be the next opportunity for the BoE to review the current base interest rate of 0.25%, with a consensus that most MPC’s will vote to keep rates on hold. However, in the wake of strong economic data there’s scope for Mark Carney to remain bullish towards the UK economy.
The latest NIESR inflation report will also be released, which predicts how inflation will fair over the next 3 months. If inflation remains above the Bank of England’s target of 2% investors will be gauging whether the BoE will opt to hike rates in the near term.
if I was placing any bets, GBP/EUR levels of 1.19 may be achievable towards the end of the week.