As I'm pretty sure they both mean favourite - does it matter on the context?
This is an interesting question as I would have argued that 'préféré' would always win hands down over 'favori' in everyday French conversation for the English 'favourite'.
As Chris points out the meaning is similar to English but of course, when 'favourite' is used to mean most likely to win ( as in a horse race or an award ceremony) you would only use 'favori/te' and never 'preféré/e' in French.
Strictly speaking , according to my Petit Robert -
favouri/te = qui plaît particulièrement ( best loved/favoured/dearest)
préféré/e= jugé meilleur (judged superior or better)
Personally, I would always say :
Zola est mon auteur préféré
Symphony est ma chanson préférée
It's like "favorite" and "preferred" in English: very similar usage.
In English the word prefer is used when comparing more than one thing - I prefer the green coat to the red coat. My favourite coat is the grey coat.
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