The first round of the French presidential election wrapped up on Sunday with no candidate garnering a majority, so we’re headed to round two in what’s likely to be a closely watched vote. We’ll briefly recap what’s happened, what’s coming up and what the implications are for the forex market.

No candidate came close to winning an overall majority in the first round, so two candidates with the most votes – Emmanuel Macron and Marine Le Pen, are headed to a second round of voting to take place on Sunday, May 7. This election cycle is a clear break from the status quo and a historical first, with neither candidate representing a mainstream party. Macron, a former economy minister, is a centrist newcomer to electoral politics who is running under his own political party’s banner. While Marine Le Pen previously belonged to the National Front, a somewhat controversial party in France that’s been associated with the far-right, and is now tapping into the populace’s anti-EU sentiment

 

What this means for the forex market

Early polls suggest a marked advantage for Macron, who is seen as business-friendly and is committed to both the euro and the EU. Le Pen, on the other hand, has made dumping the euro a key part of her campaign, and hasn’t shied away from criticizing the EU. In the unlikely event of Le Pen’s victory, the euro would be the first in the crosshairs and the currency will be greatly rattled. While a lot of Le Pen’s rhetoric is pandering to a dissatisfied electorate, the election of an openly Eurosceptic candidate would certainly cast doubt on the short-term future of the union. The markets are quite anxious at the moment so any sign of Le Pen overtaking Macron in the polls could trigger movements.

Whoever the incoming president will be, he or she will have to form a coalition in Parliament with the support of one of the two major parties in order to get things done. This could prove challenging to Le Pen more so than for Macron, who is predicted to be more stable and grounded in charge. In any case, France’s current governing system ensures that some political balance will be maintained in the new government, and that implementing any drastic changes will be difficult.

 

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