By Nick Harrison
The far right and far left-wing parties in France have said they will vote for a no-confidence motion against the Prime Minister Michel Barnier. This is due to Barnier’s decision to force the social security budget through the lower house of parliament without a final vote. This was after the far-right party – the National Rally (NR) led by Marine Le Pen – refused to support the motion despite a last-minute concession from Barnier. The Prime Minster has deeply angered the far-right and left in the French parliament and if they do indeed vote to topple him, then his government will fall. His rivals now have 24 hours to table the no-confidence vote, so we could therefore see this happening later today.
Barnier has struggled to get his 2025 budget through parliament as it has controversially targeted tax increases and spending cuts to the value of EUR 60 billion in an attempt to reduce the country’s huge public deficit. He has also heavily relied on the National Rally party to support his policies since he formed his government in September, so this could well spark the end of his reign as PM.
So, what does this mean to our clients buying or selling Euros ? Well, political uncertainty will often weaken a currency as investors will sell that currency off and buy more “safe haven” options – primarily the US Dollar. The folding of the French government in this case will likely cause volatility in the FX market as investors digest the implications of what has been happening. Le Pen’s party will be relishing this opportunity, so the rise of the far right in France continues – will it now take power in France ? If so, will the Euro be sold off and will we see new highs for the Pound against the single currency? These are important questions that investors will be answering as this situation unfolds. Make sure you connect with A Place in the Sun Currency to see how this affects the cost of your FX payments and repatriations of funds – the end of 2024 could get very interesting.
Elsewhere, the start to a busy week in the US job market saw a better than expected Job Openings figure come out yesterday. The data came in at 7.74 million against a predicted 7.51 million. This didn’t move the market much though as investors will be giving more focus to Thursdays Unemployment Claims figure and Friday’s Non-Farm Payrolls releases.
The US Federal Reserve Chairman, Jerome Powell, speaks tonight, so watch out for any market movement from his comments tomorrow morning.
As far as the Pound is concerned, Sterling will be moved by events in Europe and the States as no further UK economic data is due out this week. We are on the verge of a potential patch of market volatility as mentioned though, so we will be on hand to keep you fully updated on the market to help you make informed decisions about buying or selling your currency.
Economic Data For The Rest Of The Week
Wednesday
US ADP Non-Farm Employment Change 1.15pm
US ISM Services PMI 3pm
US Federal Chairman Powell Speaks 6.45pm
Thursday
US Unemployment Claims 1.30pm
Friday
US Average Hourly Earnings all 1.30pm
Non-Farm Employment Change
Unemployment Rate