Should Forex Traders Be Concerned About France’s Marine Le Pen?

In the wake of the Brexit referendum in the U.K. and Donald Trump victory in the U.S. president election, there has been some commotion surrounding the possibility of an ensuing nationalist uprising in France's upcoming election that could also propel National Front candidate Marine Le Pen into the country's presidency in elections scheduled for April and May 2017.

Le Pen has put forth proposals for France's break from integration in the European Union and the restoration of the country's full sovereignty and autonomous decision-making. That prospect has raised concerns among some market participants, who believe such a move could prompt future uncertainties or possible devaluation of French and European assets.

Who Is Marine Le Pen?

Marine Le Pen is a French lawmaker, and the youngest daughter of the French National Front party founder Jean-Marie Le Pen. Her father ran for election to the presidency unsuccessfully five times between 1974 and 2007, losing to Socialist François Mitterrand and his allies, and Republican Jacques Chirac and his allies.

Marine Le Pen ran for election to the presidency in 2012. She has called for a new "Europe of Nations." As part of this, she has vowed to negotiate with EU officials in Brussels to restore France's authority over border control, economic and monetary sovereignty, and control of national laws.[1]

Does Le Pen Have A Chance?

Based purely on Le Pen's record and the record of her party in French presidential elections, her chances of the presidential election do not appear very good.[2]

Many analysts predict that if she makes it into the country's runoff election, a groundswell of opposition voters, regardless of their party affiliation, could support her opponent and vote against her in order to spoil her chances in the general election. However, the current political climate in France and the tide of nationalist and protectionist sentiment that has swept around the globe have introduced some doubt regarding that supposition.[3]

According to polls ahead of the first-round vote, Le Pen has a good chance of making it into a second-round runoff, with support from about 27.5% of the voters. That puts her ahead of the nearest challengers Emmanuel Macron of the centrist En Marche party and François Fillon of the Republican Party, who have about 20% each. Under France's election rules, the two candidates with the largest number of votes face each other in a runoff election.[4]

In a runoff vote, however, Le Pen is seen losing to Macron by a total of 60% to 40%; and to Fillon by a total of 55% to 45%. When she campaigned for the presidency in 2012, she received some 6.4 million votes, or around 18% of the total in the first round.[4]

An Alert?

For forex traders (or any other type of financial trader), it may be unwise to sit passively in the face of the possibility of a sharp change in policy, no matter its likelihood. Traders are better served by preparing for the possibility of change or even viewing it as an opportunity to move into a trade ahead of the rest of the market.

Certain events—such as sudden unannounced reversals of policies by government finance authorities or central banks—may be difficult to prepare for. However, electoral decisions on changes in leadership are often widely telegraphed in advance and usually allow traders to set up their positions in an advantageous manner ahead of the change. Le Pen's strong poll numbers suggest the upcoming elections in France could be an appropriate moment for this type of foresight and advanced preparation.[5]

What Could Happen If Le Pen Is Elected?

Le Pen has vowed to hold a referendum on France's membership in the EU within the first year of her administration if she wins the election. Should voters opt to leave the EU, she has said her administration would withdraw the country from participation in the single euro currency, and re-launch a French national currency.[6]

Le Pen has suggested that her administration would favour a new national currency that floated in a narrow band in relation to the euro. It would be similar to what was used in the ECU currency system, which existed in Europe before the introduction of the euro. Some analysts have said they believe France's separation from Europe would favour the devaluation of the country's assets and possible delay in repayment of some of its debt.[7]

France's breakaway from Europe could also bring a knock-on effect for the euro. Some fear the country's defection from the single currency could encourage similar "secession" movements in other major EU nations, and bring pressure on sovereign debt in the region. Such pressure would likely weaken the euro, if not eventually encourage the breakup of the eurozone altogether.[8]

In the event such a risk arises, the market could move to short the euro in favour of other major currencies. If this scenario becomes a reality, forex traders will want to position themselves for a weakening euro.[8]


Following recent trends around the globe, the outlook for the results of the French election has become less clear. Additionally, the chance that the Le Pen could win the election has increased.

Le Pen's platform of promoting France's greater independence from the rest of Europe represents a radical break from the country's traditional stance. Her victory could lead to a revisiting of French policy that would re-introduce a stand-alone national French currency and possibly have a negative influence on the strength of the euro.

While her chances of victory in a second round of elections remain unclear, forward-looking traders will want to prepare for any possible fallout from such a scenario ahead of the elections in order to avoid taking positions that could lead to undesirable consequences.

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