Merkel makes history with re-election, and news strengthens the euro

The markets have reacted positively to Angela Merkel yesterday succeeding in winning a third consecutive term as Chancellor of Germany.

The euro hit 1.3544 against the dollar on Monday morning, up from 1.3527 on Friday.

Merkel took an estimated 42% of the vote according to exit polls, finishing short of an absolute majority, but with a higher percentage of the vote than her party the Christian Democrats (CDU) has seen in more than two decades.

Winning her third terms means she is on course to overtake Margaret Thatcher as the world’s longest-serving female leader.

Germany has been in successive coalitions for decades, so an absolute majority was not expected.

Société Générale predicts that the euro will be trading at 1.25 by the end of 2013.

Merkel said in a TV appearance on Sunday: “I see the next four years in front of me and I can promise that we will face many tasks, at home, in Europe and in the world. […]

“The party leadership will discuss everything when we have a final result but we can already celebrate tonight.”

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