The euro recovered this morning, gaining around 0.3% against most major currencies following the result of the first round of the French election.
It takes GBP/EUR down around 1% from its near-two-year high of mid-June.
You may be wondering, given that the French election result has been reported as a historic breakthrough for a far-right party, the National Rally (RN), that advocates for economic reforms and public spending at a level most economists view as unwise, to put it mildly, why has the euro gained strength?
What the currency markets are betting on is that the result is not quite good enough for RN to gain power. The French voting system means that if a party does not gain 50% in the first ballot then there is a run off next week. Now Macron’s centrist party Ensemble and the left-wing New Popular Front are likely to co-operate to block the far right from power.
Hence the French stock exchange and euro both strengthened, albeit not yet to a point they were at before the election was called. If buying euros, you still have the opportunity to cash in on GBP/EUR still significantly above the average of the past year and 2% up on the start of the year. If you were relying on the kind of GBP/EUR rate we’ve been enjoying for the past month, it would be risky to bet on that rate sticking around for much longer.
You probably don’t need reminding that the British General Election is on Thursday, with a result in the early hours.
We will be open until 10.30pm on Thursday in case the exit poll contains any shocks for the markets, and then open from 6am on Friday morning.
However, you can also fix your currency before then. Just call your account manager on 020 8108 5163.
