Euro jumps on French election results

The pound spent much of last week holding multi-month highs against the major currencies but returned from the weekend in a generally softer position.

GBP/EUR dropped from €1.1948 to €1.1790, GBP/USD dipped from $1.2854 to $1.2777, GBP/AUD slumped from AU$1.6990 to AU$1.6897 and GBP/NZD eased slightly from NZ$1.8292 to NZ$1.8177.

Why couldn’t the pound hold its best levels? Keep scrolling to find out...

What’s been happening?

After surging on the back of optimism surrounding the UK’s snap general election, demand for the pound eased slightly on Friday following a less-than-impressive domestic retail sales report.

The data showed an unexpectedly steep slump in consumer spending in March, and some believe this heralds the beginning of the general Brexit-inspired economic slowdown predicted before the referendum.

Although pound losses were limited by hints from a Bank of England (BoE) policymaker about his plans to vote for higher borrowing costs in the near future, GBP exchange rates were left down on the week’s best levels.

GBP/EUR then dropped by over 1% on Monday as the euro soared in response to the outcome of the first round of the French Presidential election.

With centrist Emmanuel Macron and far-right Marine Le Pen making it through to the second round, and Macron expected to triumph in the second vote, the odds of France exiting the EU fell significantly. The euro jumped by over 1% against the pound, US dollar, New Zealand dollar and Swiss franc on the news.

What’s coming up?

Today’s economic calendar highlights are German IFO business surveys, UK Confederation of British Industry (CBI) reports and Canadian wholesale sales data.

The German IFO gauges of business climate and expectations are expected to show improvement in April, while the UK’s business optimism, trends total orders and trends selling price figures are all forecast to dip.

If these predictions prove accurate the pound could extend losses against the euro as trading continues.

As last week’s Canadian inflation data fell short of the mark (leaving the Canadian dollar broadly weaker) another disappointing domestic report may help the pound recoup some of today’s losses against the ‘Loonie’.

We’re here to talk currency whenever you need us, so get in touch if you want to know more about the latest news or how it could impact your currency transfers.

Phil McHugh,
Trading Floor Manager

Phil looks after our large corporate clients, providing dealing and hedging services whilst also helping to manage Currencies Direct overall market exposure.