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Euro stronger after chances of a National Rally (RN) majority parliament narrows after securing first round victory..

GBP

Whilst the Pound is down 0.5% versus the Euro since Marine Le Pen's election victory, the pair remains 1% above 2024's average and over 2% up on the year so far. There is potential for more 'slides' this month and even this week depending on how the UK general election plays out. 

Usually, Sterling is very sensitive to political uncertainty and always faces an uphill battle when a big event is imminent. However, I have to say this is the most stable I have seen the Pound when faced with such an event for 15-years. A victory for either Starmer or Sunak looks a safe bet on financial markets and so the UK general election could be a 'non-event' as far as GBP is concerned (unless a hung parliament scenario). 

The French election on the other hand will and already has influenced the Pound and what happens this week will impact where the £-€ rate is headed near-term..




EUR
The Euro has gained in value since Marine Le Pen's victory was announced yesterday. National Rally (RN) won 33% of the vote, which was 3% lower compared to what the polls had them at. A majority can still be won come Sunday, but the most likely outcome now is a 'hung' legislation. 

The reason this is relief for the Euro is the uncertainty over what a 'right-wing' (or a 'left-wing' with New Popular Front who won 29%) Government looks like. France's debt is spiraling and dramatic change brings uncertainty. Traders would get nervous over what happens next with France, their position in the EU and this would weaken the €. 

Elsewhere, the Euro-Zone is posting its latest inflation figures and ECB President Lagarde has a couple of speeches lined up that should create some market movement



USD
We have a busy week for all those involved in GBP v USD, as the US posts some important economic data. The highlight comes Friday with the non-farm payrolls report, but before then, we have PMI figures and speeches from Fed Chair Powell that will no doubt create some volatility.


Upcoming Data
Monday 1st July 2024
13:00 EU - German inflation rate
15:00 US - Manufacturing PMI & construction spending
20:00 EU - ECB President Lagarde speech 




Tuesday 2nd July 2024
01:00 EU - ECB forum on central banking
08:00 EU - Spanish unemployment change
09:00 EU - Italian unemployment rate
10:00 EU - Euro-Zone core inflation, inflation rate & unemployment rate
14:30 US - Fed Chair Powell speech
14:30 EU - ECB President Lagarde speech

15:10 US - Economic Optimism Index


Wednesday 3rd July 2024
01:00 EU - ECB forum on central banking
08:15 EU - Spanish services PMI
08:45 EU - Italian services PMI
10:30 EU - German 10-year bund auction
11:00 EU - Spanish consumer confidence 
12:00 US - Mortgage applications
13:15 US - Employment change
15:00 US - Services PMI & factory orders
19:00 US - FOMC minutes

Thursday 4th July 2024
09:30 UK - Construction PMI
10:00 UK - General election
12:30 EU - ECB Monetary policy meeting




Friday 5th July 2024
07:45 EU - French balance of trade
09:00 EU - Italian retail sales
10:00 EU - Euro-Zone retail sales
13:30 US - Non-farm payrolls, unemployment rate & average earnings