France and Germany cause uncertainty in the currency markets.

Even though yesterday was a bank holiday in the UK, the currency markets  were still open, with the euro suffering against most major currencies  after the elections
over the weekend. The voter backlash against recent austerity measures has bought in a new  president in France, with the new president, Francois Hollande, wanting a more growth friendly approach and renegotiation of the fiscal compact. This puts France on a collision course with Germany and the EU who are firmly against any renegotiation. In  addition to this, Greece has also caused more pain for the struggling  single currency, as the 2 main parties supporting the country’s  international bailout failed to secure a parliamentary majority, raising further questions of Greece’s membership of the euro.
Due to the level of uncertainty the new government in France  and lack of any majority in Greece Sterling gained further ground against the euro, moving to a 3 ½ year high  against the single currency. Now that the rate has moved above  the 2010 high of €1.24, the door is potentially open for further gains, especially in the short term whilst Greece struggles to form a government. One  word of caution to any euro buyers, is once the uncertainty over Greece  is resolved we could see these recent gains given back and the pair drift back towards the low €1.20’s

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