FX round-up: Sterling endures tough time after Macron cheer boosts euro
By Andrew Schonberg
Date: Monday 24 Apr 2017
(ShareCast News) - Sterling had a tough time on major crosses, tumbling against a resurgent euro after centrist and pro-EU candidate Emmanuel Macron won the first round of France's presidential election.
He beat the far-right's Marine Le Pen, although a second round at the ballot box is scheduled for early May.
The euro's rise, said Michael Hewson, chief market analyst at CMC Markets UK, came as concerns about a difficult French political environment eased.
Hewson said that while the euro's rebound and slide in French yields came as markets started to price out the prospect of a Le Pen win, it also had the unwelcome side effect of pushing the euro higher as attention turned to the recent improvement in economic data across the single-currency bloc.
Attentions were also on this week's European Central Bank rate meeting, which could well prompt speculation that it might have to consider laying the groundwork for a tapering of asset purchases by the end of the year
"The pound has also come under pressure caught up in the turbulence of the surge in the euro despite manufacturing data showing optimism over future factory output at a twenty year high."
At about 16:59 GMT, sterling was down down 0.22% to $1.2789, and down 1.35% to €1.1781. It was also lower on the aussie, loonie, kiwi and rand, but up 0.3% to 99.114 yen. Same time, the dollar-spot index was down 0.86% to $99.114.
Chris Saint, senior analyst at HL Currency Service, said the political landscape would remain at the forefront of investors' minds this week.
"A busy economic schedule also provides us with the ECB's latest monetary policy meeting on Thursday, with initial estimates of first-quarter UK and US GDP on Friday coming under scrutiny for confirmation of any economic slowdown since the turn of the year," he said.
Connor Campbell, financial analyst at SpreadEx, noted that sterling now found itself in a worse position than it was before UK Prime Minister Theresa May's surprise announcement last week of a General election on 8 June.
"The swiftness of this turnaround suggests that despite the pound's overwhelmingly positive reaction to the June 8th election reveal it means nothing for its long-term stability," he said.
Meanwhile, the US dollar was down 1.19% to €0.9214. It also fell on the aussie and rand, but made gains on the loonie, kiwi and yen.
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