Macron win lifts pressure on Euro

EUR

Emmanuel Macron defeated Marine Le Pen, securing another 5-year term in office. Fears of a far-right leader in France had weighed on the common currency for much of the last month, with EUR/USD reaching 25 month lows. The Macron win allowed the Euro to open higher and, although it was unable to sustain the advance against the dollar, the currency demonstrated some resilience on the crosses. Moving into the week, the Russia/Ukraine conflict will continue to dominate the headlines, with possible oil sanctions/embargoes on the agenda.

 

USD

USD continues to trade strongly, showing a flight to the safe haven currencies that indicates the “risk off” nature of the market. The strong USD is also underpinned by traders pricing in a series of aggressive rate hikes in 2022, starting with a 50 basis point rise in May, and a similar rise later in the year.

 

GBP

GBP has started the week on the back foot after a series of weaker data was released last week. Friday’s decline in retail sales figures only confirmed this negative outlook, and forced a break below the long held support of 1.30. This represented a significant technical breakthrough and triggered a sizable sell-off in cable. Since then the rate has fallen a further 2 cents lower and is now struggling to hold on to the 1.28 level. Economists are predicting the currency pair could plunge towards 1.25 in the coming weeks.