London (awp/afp) – The euro took a hit on Monday in the face of the tense political situation in France, where the government could soon fall after refusing to submit to all the demands of the National Rally on a crucial text.
Around 10:00 GMT (11:00 CET), the European currency fell 0.60% against the greenback, to 1.0513 dollars, and lost 0.34% against the British currency, to 82.76 pence per euro.
The National Rally (RN) announced Monday its intention to vote on the motion of censure that the left could table in the afternoon on the very sensitive Social Security budget, if the government of Prime Minister Michel Barnier resorted to the Article 49.3 of the Constitution to have it adopted without a vote.
Examined from 3:00 p.m., this text should not be voted on by either the left or the far right, in a divided Assembly, where the presidential camp does not hold a majority.
After having, among other things, obtained that the government reduce state medical aid (AME) for undocumented immigrants, the RN demanded new concessions, such as the revaluation of retirement pensions.
But “the government has expressed its wish not to modify the PLFSS (bill on the financing of social security), it is extremely clear and we have taken note of this”, the president told AFP on Sunday. from the RN group in the Assembly, Marine Le Pen.
If the government collapses, “this could lead to budget cuts and other austerity measures that could hurt economic growth,” says XTB's Kathleen Brooks.
Furthermore, a new election in 2025 could bring the RN to power; However, the analyst doubts that this party will be able to reduce the French public deficit, currently above 6% of GDP.
“Unencouraging economic data and the prospect of significant rate cuts from the European Central Bank (ECB) next year also add to the pressure” on the European currency, adds Ms. Brooks.
The dollar also gained 0.25% against the British currency, to 1.2702 dollars per pound, supported by recent statements by Donald Trump on his Truth Social network.
The president-elect on Saturday threatened to impose “100%” tariffs on the nine BRICS countries, including Brazil, Russia, India, China and South Africa, which are considering creating their own common currency to do without the dollar, currently the reference currency for world trade.
“This means that from today the dominance of the dollar is no longer voluntary, but imposed by the United States,” said Ulrich Leuchtmann, analyst at Commerzbank.
Last week, Donald Trump had already said he wanted to impose customs duties of 25% on all products imported into the United States on Mexico and Canada.
Monday lessons Friday lessons
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10:00 AM GMT 10:00 PM GMT
EUR/USD 1,0513 1,0577
EUR/JPY 158.03 158.41
EUR/CHF 0.9316 0.9317
EUR/GBP 0,8276 0,8305
USD/JPY 150,33 149,77
USD/CHF 0,8861 0,8809
GBP/USD 1,2702 1,2735
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