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Macron-Positive Election Forecasts Push EUR GBP Exchange Rate to 7-Month High

The EUR GBP exchange rate has improved over Monday’s afternoon session, extending earlier gains to post 0.8836.

This comes as news filters through about the state opening of parliament possibly being delayed. Such a potential outcome has sapped confidence in the UK economy, as it would also delay how soon key Brexit negotiations can begin.

(First published 10:58, June 120th, 2017)

The Euro has risen moderately against the Pound today, posting a 0.4% advance after French election news.

  • EUR GBP trades up at 0.8826 – GBP EUR exchange rate drops to 1.1327
  • Euro demand rises on French election hopes – Polls point to majority for President Macron
  • Pound remains weak as coalition talks continue – Concerns voiced about Conservative clashes with DUP
  • Euro rally possible on incoming confidence stats – Pound may slump on signs of wage squeeze

This EUR GBP advance comes after a hung parliament result in the UK, and a preliminary round of French parliamentary voting.

Strong Signs of En Marche Victory Boost Euro to Pound Demand

Fresh on the back of May’s presidential election victory for Emmanuel Macron, France’s youngest president has been in the headlines again today.

Still in the early stages of his presidency, Macron’s first major challenge is securing a majority in the French parliament. The weekend brought the first round of voting, with polls estimating that Macron’s La Republique En Marche party could secure a sizable majority.

France’s parliament has 577 seats, while polls predicted En Marche to secure between 415-445. Gaining seat numbers at the higher end of this scale would give En Marche an over-75% dominance in the French parliament, making Macron’s job much easier.

Macron swept to victory in May on a centrist agenda, which was widely seen as the best way forward for France. If the coming Sunday’s second round of voting confirms En Marche as the largest party, then a Euro rally may take place.

Pound Dips as Conservatives and DUP Deal Remains Unsigned

The Pound has posted losses against the Euro today, in the still turbulent aftermath of last week’s UK general election.

The Conservatives failed to secure an overall majority, which has left party officials trying to reach an agreement with the Democratic Unionist Party (DUP).

It is widely expected that a Conservative-DUP union of some form will take place, but crucially a deal has not yet been reached. There are notable differences in stance on key issues between the parties, such as on the pensions ‘triple lock’, same-sex marriage and abortion.

It is assumed that the DUP will largely remain a quiet backer of Conservative policies in exchange for more funding for Northern Ireland, which could make for an amiable agreement.

Until a deal is agreed, however, Pound traders may remain wary about the possible compromises from such a deal, which means a near-term Sterling rally is unlikely.

EUR GBP Forecast: Greater Euro to Pound Gains Forecast on Incoming Confidence Scores

The next Eurozone data to watch out for will be Tuesday’s Eurozone and German ZEW sentiment scores. Covering June, the German figures are expected to show rising confidence, which could in turn boost Euro demand.

The Pound’s current losses may expand further in the coming days, if UK inflation rises sharply on Tuesday. This will be followed by a possible slide in wage growth on Wednesday, which could damage the Pound on fears of falling spending activity due to a wage squeeze.

Current Interbank EUR GBP Exchange Rates

At the time of writing, the Euro to Pound (EUR GBP) exchange rate was trading at 0.8826 and the Pound to Euro (GBP EUR) exchange rate was trading at 1.1327.