French PM Lecornu resigns after less than a month in office - BBH

France's political crisis deepened. Prime minister Sébastien Lecornu resigned this morning, less than 24hrs after naming his new government and after less than four weeks in office, BBH FX analysts report.

Political turmoil in France pushes OAT-Bund spread to highest since 2024

"Lecornu's resignation means President Emmanuel Macron, who plans to serve his full term until May 2027, must choose between appointing a sixth prime minister in less than two years or call a new parliamentary election. Appointing a new prime minister won't solve the pattern of rapid government changes. The National Assembly is deeply divided, with no single party holding a clear majority."

"French OAT-German Bund yield spreads widened to 87bps, the highest since December 2024. Still, France's political turmoil remains country-specific and not systemic as Eurozone periphery bond yields spreads to Germany are contained. We expect EUR/USD to hold above its 100-day moving average (1.1622). If this level gives way, the next support is offered at 1.1575."

"ECB President Christine Lagarde speaks later today (6:00pm London, 1:00pm New York). Last week Lagarde signaled again that the ECB is pretty much done easing noting that "We are in a good place and we have to make sure that we stay in that good place." Bottom line: ECB/Fed policy stance continues to underpin the uptrend in EUR/USD."