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24th June 2024 | How elections could rock the FX market

Weekly Market Headlines:

    Will GBPEUR levels regain their recent lost ground? Pound to Euro levels have stumbled since the rise that followed French President Macron’s surprise announcement. Will they regain this 22-month high or have we now moved past the peak?
    French and UK elections loom: It is now just 6 days to the French election and 10 days to the UK election, which means only a few days to ensure we have everything in place to handle your FX requirements in this potentially very busy period.
    Increased volatility expected: Our research indicates for GBPEUR levels a 4% average market movement over a French election and 5% average over the time of a UK General election.

    In Depth: This Week’s Market Update

    Today, it is just six days to the French election and ten days to the UK election. Despite the initial reaction to Emmanuel Macron’s announcement, we have not seen excessive movement in Euro rates, but we did move to fresh lows for the Euro against the pound. Our research indicates an average of over 4% of GBP/EUR exchange rate movement since 2002 during the French election period.

    With the first round of the French election taking place on Sunday, 30th June, and the FX markets closed until Monday morning, we could possibly witness increased volatility on Friday afternoon and Monday morning next week. With the UK election then just three days later, and our research showing average movement of over 5% in GBP/EUR levels around the time of a UK General Election, next week could trigger market movement too.

    The pound is trading against the Euro at ¾ of a cent off the highest since August 2022. The upcoming elections could, therefore, change this picture by extending the highs or triggering a drop. With increased volatility comes greater opportunity but also risk, highlighting the importance of being up to speed with the latest rate movements and breaking news.

    What events might move exchange rates this week?

    GBP

    • Friday– UK GDP

    USD

    • Wednesday – US New Home Sales
    • Thursday – US Jobless Claims & US GDP
    • Friday – US Inflation