A Triumph for M. Macron and the Pollsters in Round One

French surveyors of public opinion have done a good job so far, with the results from Sunday’s first round of the French presidential race very close to the final set of polls. In line with our central forecast, it is Emmanuel Macron and Marine Le Pen who proceed to the definitive round on 7 May, with the vote reportedly split 61/39 in favour of the centrist candidate.

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Absent a dramatic shift in sentiment, the polls — which were largely accurate in predicting the first-round outcome — ought to give us some comfort that M. Macron will become the next President of France. However, there is a risk that abstentions will be greater than normal, which would favour Mme Le Pen.

As readers will doubtless be aware, the two candidates offer voters two radically different visions of France. Mme Le Pen is committed to taking France out of the single currency, while M. Macron is pushing for greater EU integration.

Taking comfort from the polls, which suggest M. Macron is in pole position, European equities, bonds and the euro have all rallied. As our chart highlights, European banks have been the big winners. However, as we noted in last week’s News in Charts, the relief rally in EURUSD will be short lived as the diverging paths of the ECB and the US Federal Reserve cause the euro to depreciate throughout the second half of this year. Our central scenario sees the common currency falling to parity against the US dollar by early next year.

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