Emmanuel Macron unveiled a plan to gradually raise the minimum retirement age in France from 62 to 64 by 2030, drawing the ire of trade unions. They immediately called for strikes in protest against the reform.
In a statement, Macron said citizens need to work longer in order to raise the relatively low employment rate of the elderly, as well as prevent a permanent deficit in the public system financed by employee contributions. However, trade union organizations believe that this just unfairly punishes low-skilled workers and people who started working at an early age. They called for a first day of strikes and demonstrations on January 19, saying it is a start.
The reform should be a defining moment in Macron's second five-year term as president. If he manages to push through this, he will face the paralyzing upheaval that accompanied, and sometimes crushed, attempts by his predecessors to change labor and retirement laws. But if he backs down, it will undermine his ambition to bring about a business-friendly transformation of the economy in France over a decade.
The government plans to introduce a bill in parliament as early as February this year, and Macron may eventually have to use a special constitutional measure to bypass the vote if he cannot persuade some opposition MPs to support it. Recall that Macron was forced to withdraw his pension reform proposal in 2020 after months of demonstrations and strikes. At that time, they had to back down due to the Covid pandemic. This time, the reason to step aside could be the troubled French economy, which is struggling with rising energy prices and high inflation. Public finances are also struggling after huge spending during the pandemic and energy crisis.
So far, this has not affected the markets in any way, but once the unrest starts, it is likely that euro will decline. But for now, it still has a chance of updating the December highs as long as buyers manage to push the quote above 1.0760. That is the only way for EUR/USD to reach 1.0790 and 1.0850. A drop below 1.0720, meanwhile, will bring the pair to 1.0680 or to 1.0650.
In GBP/USD, buyers need to stay above 1.2140 to maintain their advantage as the rise is gradually slowing down. The breakdown of 1.2200 will spur the pair to reach 1.2260 and 1.2301, while a fall below 1.2140 will push it to 2090 and 1.2040.