The Euro to Pound exchange rate recorded slight gains on Monday, but GBP/EUR remains vulnerable to shocks in French politics.
Having been inaugurated on May 14th, French President Emmanuel Macron has hit the ground running and already named his pick for Prime Minister.
In a move that could benefit him in June’s parliamentary elections, Macron has chosen right-aligned Republican Edouard Phillipe. Macron himself is a centrist, so including France’s political right could help him garner support.
French law means that Macron’s choice may be challenged if he doesn’t have a parliamentary majority. Despite this, some analysts predict that that by choosing Phillipe, Macron could ‘peel away’ disloyal Republicans to the centre.
Commenting on the decision was Republicans Secretary General Bernard Accoyer;
‘This is an individual decision. It is not a political agreement. Will this new Prime Minister support the candidates of En Marche (of the President)…or will he support the candidates of the Republicans, the candidates of his own political family?’
This is the million Euro question for Macron; if his choice of PM wins the Republicans over, then the Euro could rally. Conversely, if Phillipe takes the job but sticks to his old party allegiance then the Euro may tumble on fresh fears of Macron facing difficulties in passing policy.
The Pound could be influenced in the future by any dramatic shifts in UK opinion polls leading up to June’s general election.
The latest polling figures put the chances of a Conservative victory between 46-48%, while Labour is between 30-32%.
If Labour suddenly seem to be surging in the polls, then the Pound may depreciate against the Euro. This is because while a Conservative victory would largely be a resumption of the status quo, a Labour government would be untested.
The main UK parties still need to officially unveil their manifestos, so a major shift in the polls is still possible. While Labour’s plans have been broadly leaked, the final form could feature notable changes compared to the draft.
While the election is broadly considered a race between the Conservatives and Labour, any rising support for the other competing parties may sap potential votes away from the ‘Tories’. This is particularly likely after the manifestos are revealed.
Recent Interbank EUR GBP Exchange Rates
At the time of writing, the Euro to Pound (EUR GBP) exchange rate was trading up at 0.8505 and the Pound to Euro (GBP EUR) exchange rate was trading down at 1.1760.
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