EUR gets leg up from France Budget boost and 'looks well placed to post further gains'
They do say that a week is a long time in politics. Not only is French Prime Minister Lecornu now back in the top job, but he now appears to have a decent chance of getting a revised budget through parliament. In these revised plans, Lecornu has proposed a suspension of Macron's pension reform until 2027.
His fiscal package targets a reduction in the deficit to 4.7% of GDP, a slightly less ambitious goal than his predecessors. While stopping short of introducing a wealth tax, one of the demands from the Socialists, he has committed to what he called an “exceptional contribution from large fortunes.”
Socialist MPs, whose support is critical for Lecornu's political survival, have welcomed the pension reform pledge.
This gives the Prime Minister a fighting chance to both survive today’s no-confidence vote and pass the 2026 budget, albeit the vote looks set to be extremely tight.
The euro has received a bit of a bid from the news and looks well placed to post further gains should the budget indeed receive enough support in parliament.
Author
Matthew Ryan, CFA
Ebury
Matthew is Global Head of Market Strategy at FX specialist Ebury, where he has been part of the strategy team since 2014. He provides fundamental FX analysis for a wide range of G10 and emerging market currencies.
