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EUR GBP, EUR USD Weaken as Markets Get Jittery Before French Election

Jitters ahead of Sunday’s French Presidential Election vote have seen the Euro weaken against the Pound and US Dollar today.

The common currency is down -0.2% against both, with EUR GBP trading around 0.84 and EUR USD trending in the region of 1.09.

Polls still suggest that Emmanuel Macron will easily triumph over Marine Le Pen, with the latest polling data showing he has recovered support to trend around his best since the first round of the elections, leading over Le Pen by 62% to 38%.

However, the Euro is inching lower as markets are still haunted by the shocks of the Brexit referendum and the election of Donald Trump as President of the United States – both of which investors had strongly discounted and therefore caused significant turmoil on the currency markets.

The day’s data has been mostly supportive, although political focus has kept it from having a positive impact upon the common currency.

While the German construction PMI for April has fallen from 56.4 to 54.6, this still leaves the sector performing at a strong level.

Growth of construction activity remained historically strong, with sharp gains registered in all three main areas of the sector,’ explained Trevor Balchin, IHS Markit Senior Economist.

The Eurozone retail PMI performed strongly, rising out of contraction territory, with Markit explaining;

The headline Markit Eurozone Retail PMI – which tracks the month-on-month changes in like-for-like retail sales in the bloc’s biggest three economies combined – rose to 52.7 in April, from 49.5 in March, and signalled the steepest increase since July 2015.

Meanwhile, the Pound is strengthening after early results from the UK’s local council elections has suggested the Conservatives have seen a huge surge in support, with Labour, the Liberal Democrats and UKIP all losing high numbers of seats.

Analysts are interpreting this as an indication that the general election could result in a Tory landslide, helping to smooth out the Brexit process by firming Theresa May’s majority in Parliament and therefore limiting opposition interference.

This comes despite the latest sign that relations between the UK and the EU are swiftly deteriorating ahead of the start of exit negotiations.

Jean-Claude Juncker, the European Commission President, has told an audience today that he would deliver his speech in French instead of English because ‘slowly but surely, English is losing importance’.

His barbed comments are the latest in the continued backlash from EU officials after Theresa May accused them of trying to interfere with the outcome of the UK’s approaching general election.

The US Dollar is on mixed form, as markets await the opening of the US data docket this afternoon.

Only US data is left on the calendar for release today, but the high-profile developments are likely to cause significant volatility for Euro exchange rates.

The data docket contains the high-profile non-farm payrolls report and the unemployment rate figures for April.

Meanwhile, Federal Reserve officials Stanley Fischer, John Williams, Charles Evans, Eric Rosengren, James Bullard and Chair Janet Yellen are all due to make speeches this evening.