24 February 2025
Weekly Market Headlines:
Currency markets opened volatile last night following the German election results, which saw the CDU/CSU party secure 28.6% of the votes. However, this result falls short of the threshold required to govern outright, meaning a coalition must now be formed—a process that could take several months.
Meanwhile, the far-right AfD party secured 20.8% of the vote, marking its strongest support since World War II and making it the second-largest party in Germany.
The Euro experienced sharp price movements as markets opened but has since strengthened against both the British Pound and US Dollar as the risk of a larger-than-expected AfD vote subsided and results were confirmed.
Key Market Insights:
Coalition uncertainty
- This week, markets will continue to digest the election outcome, focusing on how long it might take to form a coalition.
- Many analysts suggest any coalition formed is unlikely to remain stable for a full four-year term, especially with the AfD strongly opposing many CDU policies.
GBP/USD near 10-week highs:
- GBP/USD remains near 10-week highs, with traders closely watching US GDP figures due Wednesday.
- Weaker-than-expected data could fuel further upside for GBP/USD, while a strong reading could trigger a notable pullback from current highs.
How we can help you:
As uncertainty lingers around the formation of Germany’s next government, markets will closely watch coalition negotiations, as the final structure of leadership will play a crucial role in shaping Euro sentiment in the coming weeks.
Your Lumon currency specialist is here to support and guide you through this volatility. If you’d like to take advantage of current rates or protect against future risk, please call +44 (0) 203 384 7280.
