The ‘Trump hump’

Two days into Donald Trump’s surprising victory GBP/USD has ridden a tide of emotions. In the initial instance, at the point it became apparent Donald Trump would win, those with a Pound to US Dollar purchase requirement saw rates jump temporarily from 1.235 to 1.255 before quickly returning to the more familiar territory of mid-1.24 range in the so called ‘Trump Hump’. Executing your trade at the best time during the momentous election day could have gained you an extra $1,750 on a £100,000 transaction in the space of just 4 hours.

Therefore, it is vital you keep in touch with your experienced personal broker here at currencies.co.uk during this volatile period to help you take advantage of any further sudden shifts.

Possibility of early UK trade deals

The US is the largest single export destination for UK goods and services ($51bn last year). With trump widely indicating he regards the UK as a key trading partner who will be afforded swifter, simpler free trade deals than was proposed by President Obama. This could give GBP a significant boost when negotiating trade deals in the aftermath of Brexit as it is not dependent upon Article 50 having already been triggered.

Furthermore, EU leaders are still adopting a tough stance towards Brexit negotiations as they are fearful that populism is on the rise throughout The Netherlands, France and Germany, all of whom face elections next year which could significantly weaken the Euro.

The combination of a swift US trade deal and increased uncertainty in the Eurozone could see GBP currency pairs strengthen significantly in 2017.

The Marmite Crisp Index

Next week sees the UK consumer price index figure for October published on Tuesday 15th at 9:30am. This key measure of inflation, calculated through a representative shopping basket of goods and services is expected to rise from 1% in September as we start to see the weaker pound’s post Brexit levels trickling down into increased prices of household brands that have hit the headlines recently such as Walkers, PG tips and Bird’s Eye to name but a few.

With the BOE (Bank of England) expecting inflation to increase to 2.7%, above its 2% target in 2017, this could signal the potential for future weakness in Sterling and the possible loss of this week’s gains against the EUR and USD?

A change in political direction could create a volatile currency market, clients looking to transfer funds should look to safeguard themselves in the event of further swings. Call our trading floor on 01494 725 353 to discuss a requirement.

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Exchange rates on this page are interbank rates and indicate where the market is trading to show the performance of a currency pair. They are not indicative of the rates which we offer. The information on this web site is provided free of charge for information purposes only. It does not constitute advice to any person on any matter. Foreign Currency Direct plc. ("FCD") makes every reasonable effort to ensure that this information is accurate and complete but assumes no responsibility for and gives no warranty with regard to the same.