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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.