The rise of the AfD raises concerns for the future of the EU and Germany’s future relationship with France, German media has warned.
This uncertainty concerning the German election took its toll on Eurozone markets, with the euro noting a significant slide.
Sterling has been further supported by encouraging data out of the UK this week, and could see these gains extended, according to experts.
TorFX currency analyst Laura Parsons said: “With the outcome of Germany’s recent general election still causing the euro trouble, the GBP/EUR exchange rate was able to climb by a further 0.3 per cent on Tuesday and achieve a high of €1.142.
“Sterling was also supported by an improved BBA loans for house purchase figure, which suggested that the UK’s housing market is proving remarkably resilient to the uncertainty inspired by the ongoing Brexit negotiations.
“If today’s UK sales figures from the Confederation of British Industry (CBI) show an improvement in consumer spending in September, the pound may be able to extend its gains further.”
Following the defeat for Mrs Merkel’s party in the German election, it now has to attempt to form a coalition with the Free Liberal Democrats (FDP) and the Greens.
Many Germans were alarmed by the rise of AfD who the foreign minister likened to Nazis.
Protesters threw stones and bottles at police outside its campaign party in Berlin on Sunday.
Mrs Merkel intends to serve a full four years as Chancellor.
But her next coalition could be her toughest yet with her only remaining potential partners, the business-friendly FDP and the pro-regulation Greens, at odds on issues from migrants to tax, the environment and Europe.
The talks are likely to take some time, clouding the political outlook for Germany, the Eurozone and even Brexit.
