Sterling Value Soars in Wake of Macron Presidency

May 17, 2017

The election of the new French President Emmanuel Macron appears to have been good news for Britain on both a political and economic level, with the value of the pound confounding expert expectations and rising sharply since Sunday’s announcement.

Presidential Result Announcement

Mr Macron’s victory certainly wasn’t a surprise in the runoff between him and Marine Le Pen. After all, most commentator and pollsters had predicted that he would poll above 60{083390938f484c452e08a84ea1fac0a9158b26745442978ab7ea4003b5815b10} and comfortably beat Le Pen. The only slight surprise was that he beat these expectations, winning 64{083390938f484c452e08a84ea1fac0a9158b26745442978ab7ea4003b5815b10} of the vote to Le Pen’s 36{083390938f484c452e08a84ea1fac0a9158b26745442978ab7ea4003b5815b10}.

However, the main way that the presidential election confounded the experts is economically. Many believed that a Macron victory would be bad for the UK, causing the pound to drop. However, instead, it has gained against the euro since Macron won.

What Happened to the Pound after the Result?

Immediately after the result was announced, the euro did jump against the pound. However, after the immediacy of the result passed, the euro weakened against both the pound and the dollar. Much of the sale of the euro stems from the fact that a Macron victory had already been “priced into” the markets. This meant that forex traders using online brokers such as London Capital Group immediately sold their euro assets after the result was announced, causing the price of sterling to rise by 0.4{083390938f484c452e08a84ea1fac0a9158b26745442978ab7ea4003b5815b10}.

Is Now the Time to Invest?

However, if you’re looking at investing, you should remain cautious; especially considering the political instability at the moment. As a result, if you’re going to invest, ensure you’re savvy.

Brexit uncertainty and the wait for a recently called General Election means that there’s currently a lot of political uncertainty that’s impacting upon sterling. On the one hand, if Mrs May wins the election, the value of the pound could soar further; especially if she has a large majority in the House of Commons.

However, even if, as many predict, this is the case, we will still be surrounded by Brexit uncertainty for the next two years. We have already begun to see how turbulent these discussions can be. This is likely to impact on the value of the currency until at least March 2019, which means you’ll need to tread carefully until at least then when trading, as the markets will be volatile.

To conclude, the election of President Macron has been good for the pound. However, with a General Election on the horizon, expect further volatility.