Since Emmanuel Macron won the French Presidential election, the Euro has steadily fallen against the Pound (EUR GBP). This is mainly due to marketplace uncertainty about Macron himself and his chances of gaining the support he needs in June’s elections to implement his economic reforms.
The EUR GBP exchange rate initially spiked when Macron’s victory was announced, pushing the Euro up to almost 0.85 against the Pound. The latest devaluations show that traders are already concerned about turbulence at the start of Macron’s presidency.
The first trial of France’s youngest President will be June’s legislative elections. Two rounds of voting will determine who sits in France’s parliament, in turn affecting how easy it is for Macron to pass laws and make policy changes.
Macron may have won the Presidential election by a 66% landslide, but according to Rainbow Murray, Queen Mary University London Associate Professor of French Politics;
‘This year there were lots of people who couldn’t bring themselves to vote Macron but wanted to register their dislike for Marine Le Pen’.
This theory is supported by ballot statistics, which showed that 12.1 million voters either abstained or spoiled their ballots in protest, equating to a greater number of protest votes than votes for Le Pen. The anti-EU candidate secured 10.6 million votes.
For success in June’s elections, Macron needs to rally voters to support the En Marche party or its allies, the Democratic Movement (MoDem). Both approaches come with problems, as while MoDem was founded in 2007, it currently has minimal representation in parliament.
En Marche, founded by Macron in 2016, is even less stable, having no representation due to its fledgling nature. Marta Lorimer of the London School of Economics has highlighted Macron’s difficulties;
‘With the lowest turnout since 1969, Macron’s opponents can still say he is not really legitimate. Going into the parliamentary elections is going to be so much harder than if he’d won [over] 80% of the vote’.
If Macron wins big in June’s elections, Euro (EUR) exchange rates could rally as a parliamentary majority would raise the chances of a stable and effective Presidency.
Election news will also impact the Pound in the near-term. With less than a month to go before the June 8th election, the UK’s political parties are stepping up their efforts to win over voters.
The UK’s major terrestrial channels will be staging debates and questioning party leaders in the run up to the election, which could significantly swing the polls.
If it looks like Theresa May has been well received in her various television appearances, then the Pound Euro exchange rate could improve on hopes of a landslide Conservative election victory.
Recent Interbank EUR GBP Exchange Rates
At the time of writing, the Euro to Pound (EUR GBP) exchange rate was trading at 0.84 and the Pound to Euro (GBP EUR) exchange rate was trading at 1.18.
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