Spanish elections: Market-friendly government is possible after 50% of the votes counted

Counting continues in the Spanish elections. The center-left PSOE is set for a broad victory with 126 seats in the 350-strong government, far ahead of the right-wing PP in the second place. 

Incumbent PM Pedro Sánchez will likely remain in power. He can form a market-friendly government with center-right Ciudadanos. While the leader of the party Albert Rivera ruled out a government with Sánchez, pressure from big business could lead to such a government. Both parties have together around 181 seats, more than 176 needed for a majority. 

If Rivera continues rejecting a coalition with the PSOE, the PM will likely opt for a left-leaning government with the left-wing Podemos. Such a coalition has 167 at the time of writing and would need support from regional parties, including pro-independence Catalan parties. 

The counting continues and full results are due when markets open. EUR/USD ended the week around 1.1145 and will likely react to the results.