Election day volatility for the Pound

Yesterday, Donald Trump defied the odds to become US President number 45. Similarly to the Brexit vote, his victory sent shock waves of uncertainty across the global markets in the early hours of yesterday morning causing many investors, who had anticipated a Clinton victory, to make quick dash actions to limit their losses.

In contrast to Brexit however, these risk averse actions took place over a far shorter period of time and allowed the markets to restabilize throughout the day. This all lead for quite a volatile day for the Pound.

The Pound reached highs of 1.254 over the dollar when Trump’s victory was confirmed before returning to 1.24 and produced considerable gains over the Euro rising by around 3.6% throughout the course of the day.

Yesterday’s movements showed just how important it is to be informed on geopolitical matters and how they affect the Forex markets. Our specialist traders made sure their clients were informed and ready to act on this short term opportunity.

On a purchase of €200,000, our traders were offering savings of up to £5,000 purely by making sure our clients got their timing right. It may be worth getting in touch today so that you don’t miss the next opportunity to act.

Brexit still the clear factor for Pound Sterling

What yesterdays reaction by the Pound suggests is that the market has already fixed the triggering of Article 50 as the defining factor for long term strength or weakness for sterling.

Despite a drop of the Dollar as the polls from the US Election came in, Sterling was unable to gain sustainable momentum, still shackled by the uncertainty attached to the implications around Brexit. This left many hoping for a brief GBP recovery disappointed and I have a strong feeling this is a sign of things to come.

Those looking to buy Euros with Sterling should maybe look at acting sooner rather than later to capitalise on the highest rates since the start of October.

How will Trump’s election affect the Pound in the long run?

Having said that, international politics maintains a strong position on the currency compass and Trump’s election is bound to have repercussions on the Pound over the coming months.

Trump’s promise to increase taxes on imported goods will throw a number of trade agreements in the air and create a lot of uncertainty for the relevant currencies. However, he has made it clear that the UK will be “at the front of the queue” when it comes to leading relationship talks and our ongoing divorce with Europe shouldn’t affect that.

Furthermore, Trump’s protectionist approach will only boost our relationship, given the high end nature of the goods and services the UK exports to the states will not fall under his high tax profile.

Given that the US is the UK’s leading exporting market, providing 6% of the UK’s GDP, Trump and Theresa May sharing positive words yesterday should spell good, even if limited news for the future.

The inflation reports hearings from the house of commons will be take place at the start of next week and will certainly be a market mover for the Pound. If the ever growing list of household products with heavily inflated prices is anything to go by, it could spell the start of the next downward spiral for sterling. If EUR sellers are interested in finding more about this, our specialist traders will have their fingers on the pulse and will be more than happy to share their knowledge to help you make an informed decision.

There could be some positive news for the UK post-Brexit. Whilst a Trump victory has a negative sentiment amongst investors it could be useful when it comes to seeking trade deals elsewhere. With so much yet to unravel call our trading floor on 01494 725 353 or email me here if youd like to discuss a currency transfer.


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