Liberation and globalisation have beaten protectionism with an unsurprising win for Macron in the French election. Although this was, to a large degree, already priced in by the markets, we did see Euro jump up on the news, pushing above 1.10 against the USD as markets opened today which is the highest level for the Euro since November. Investors will be relieved by this French decision as it takes way a lot of the uncertainty that would have come with the anti-Euro, anti-EU stance of Le Pen.
So what does this mean for the UK? Whilst a lot of the uncertainty has been removed for France, the news has increased the uncertainty for the UK.
Le Pen openly congratulated the British public on their decision the leave the EU whereas Macron on the other hand, has been very open in his criticism. According to Macron, Brexit is a ‘crime’ and that the UK will face ‘servitude’. This is not good news for Theresa May’s EU negotiations who will need lenience and understanding to enable her to get a good deal for the UK. With Macron at the helm, it’s going to make the whole thing much trickier and it’s less likely the UK will get what they want. This uncertainty is likely to increase volatility in the markets and we could see the Pound weaken further if Macron releases any more sentiment on his feelings towards the UK.
If the Tories win a vast majority in the general election on June 8th, we could see Sterling strengthen significantly. Local elections are showing strong Tory gains so it’s likely we could see a strong win for May, giving her the confidence and position to be able to push through policies without as much friction from parliament.
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