The Euro Pound (EUR GBP) exchange rate held steady this morning as the pairing remains buoyed by the first round results of the French election.
The single currency was resilient this morning as EUR sentiment remains high following Independent Pro-EU candidate Emmanuel Macron’s performance on Sunday. Macron will now face far-right Eurosceptic Marine Le Pen in the run off in May as predicted.
The result also caused markets to begin putting more faith in polling data for the election, as they correctly predicted Macron’s lead on Sunday, with markets optimistic that their forecasts of a 60-40 win for Macron in the second round will also prove to be right.
Other defeated candidates have also thrown their support behind Macron, with Republican François Fillon and Socialist Benoît Hamon urging their supporters to vote for Macron in order to block Le Pen from the Presidency.
However, Le Pen remains defiant in the face of her polling numbers telling her supporters that ‘we can win, we will win’ as she made the surprise announcement that she would be stepping down as leader of the National Front.
In a statement on Monday Le Pen said;
‘So, this evening, I am no longer the president of the National Front. I am the candidate for the French presidency.’
Analysts believe this move may help her win more bipartisan support as she attempts to scoop up some of the backers of her defeated political rivals as she ditches the toxic image of the National Front.
The EUR GBP exchange rate was also strengthened by this morning’s French Business Confidence data as morale unexpected rose to a near six-year high of 108 in April, up from 105 the month before and beating early estimates that it would tumble to 104.
Meanwhile, the Pound was weakened this morning by the release of the UK’s latest Public Sector Borrowing figures.
According to data released by the Office for National Statistics (ONS) Britain’s public deficit grew to -£4.36bn last month, down from an upwardly revised surplus of £0.66bn and worse than the -£1.5bn deficit that economists had forecast.
While accompanying data showed that the UK government borrowing for the last financial year reached its lowest level since 2007/08 during the financial crisis, helping to prevent any major losses for Sterling, the outlook from analysts for the next year was decidedly more downbeat.
John Hawksworth, chief economist at PwC said;
‘In the longer term an ageing population and rising healthcare costs will also put pressure on the public finances. So while the deficit is now approaching a more sustainable level, there will still be some tough choices ahead on tax and spending for the next government.’
Looking ahead, the EUR GBP exchange rate is likely to strengthen further tomorrow morning if France’s Consumer Confidence data performs similarly well to April’s business figures, although analysts currently predict that it will hold at 100.
Meanwhile the Pound may stumble again if Nationwide’s latest UK housing report shows that prices continued to decline this month, after a sudden contraction of -0.3% in March.
Current Interbank Exchange Rates
At the time of writing the EUR GBP exchange rate was trending around 0.85 and the GBP EUR exchange rate was trending around 1.17.
