French presidential election weighing on the euro

GBP

Sterling had a mixed day against the euro on Monday as a combination of disappointing economic data and uncertainty around the French presidential election created a concoction of volatility for the British currency.

As the new week got underway, the pound faced some heavy selling pressure. A weak GDP reading for the month of February elevated investors’ concern that the UK economy could soon stall. According to the data released by the Office for National Statistics, UK GDP slowed to 0.1% from 0.8% in January missing expectations of a 0.3% growth.

Industrial production also slowed showing a contraction of -0.6% as shortages of manufacturing equipment and storms impacted UK production.

EUR

The euro also had a mixed trading session on Monday. According to the preliminary results for the French presidential election, President Macron achieved around 27% of the vote whilst far right candidate Le Pen took around 23.4%. Analysts believe a Le Pen win would be the worst outcome for the euro and could force the single currency to trade at multi-year lows. During the previous election, Macron was also challenged by Le Pen with a mandate to take France out of the European Union. Whilst, Le Pen hasn’t announced a campaign to take France out of the EU on this occasion, her policies remain a negative scenario for France and ultimately the euro.

Key announcements

07:00 – GBP – Unemployment rate fell to 3.8%
07:00 – GBP – Average earnings read 5.4% in line with expectations
07:00 – GBP – Claimant count rate (Mar) 4.3%
09:00 – EUR – ECB lending survey
13:30 – USD – Consumer Price Index ex food and energy (YoY) (March) expected to read 6.6%