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France’s and EU Future, Far-Right ? Far-Left ?

After recent news and market headlines were dominated by the UK snap general election announcement, the markets are now turning their attention towards the upcoming French presidential election. The outcome of the French presidential election will most likely result in heightened volatility for the Euro and European stock markets which look likely to be most affected by the introduction of the far-right candidate Marie Le Pen.

The first round of the French election will be held this Sunday April 23. Altogether there are eleven candidates. If none of the candidates gets more than 50% of the votes in the first round, the two winners will enter the second round of the vote will be held on May 7.

The consensus thus far is that the Centrist Macron and the far-right wing Le Pen are most likely to pass into the second round, with Macron being the favourite to win the final vote. But if the past year has thought us anything, polls do not always accurately gauge public sentiment and there is a possibility that La Pen could win the election.

The far-right wing Le Pen, and the far-left wing Jean-Luc Melenchon are the focuses of the election because of their extreme political stances, and Jean-Luc Melenchon is the only candidate among the four whose share of vote saw an increase recently.

Le Pen takes a similar stance to Trump, the focus of her policies are France first, including anti-globalization, anti-immigrants, trade protectionism, repealing the Euro and reusing the Franc, and most noticeably: making France leave the EU.

Many French voters are in favour of Le Pen’s policies, due to France’s high unemployment rate and recent terror attacks; provoking citizens’ anti-foreigner sentiment. France and Germany are the EU’s largest economies. If Le Pen wins, France might leave the EU, following the UK, and triggering a level of uncertainty that could well lead to the downfall of the single market.

Regardless of this weekend’s outcome we can expect to see volatility across European markets as the election moves towards the second round of voting on May 7th.

The Bank of England Governor Carney will make a speech at 16:30 BST today, it will be followed by the US Treasury Secretary Mnuchin’s speech at 18:15 BST. The speeches will likely affect GBP and USD crosses.

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