- Patrick Maflin
Trump Wins US Presidency – Sterling (GBP) Fluctuates as Markets Panic
Pound Sterling (GBP)
The Pound saw heavily mixed movement on Wednesday morning as traders around the world rapidly adjusted their positions on major currencies following the day’s shocking US Presidential election news.
The surprise win of unorthodox Republican candidate Donald Trump sent markets into a panic after investors had generally priced in a win for Hillary Clinton in a situation eerily similar to the surprising Brexit vote in June.
All of Sterling’s movement throughout Wednesday morning was the result of this event. Sterling soared against the US Dollar and risk-correlated currencies as investors rushed into other ‘safe haven’ assets. This, of course, meant the Pound plunged against ‘safe haven’ currencies and the US Dollar’s biggest rival, the Euro.
US Dollar (USD)
The US Dollar has had a busy night, with markets selling the currency off en masse as news of Republican nominee Trump’s increasing lead in State-by-State polls quickly shifted market perception of who the winner would be.
After Trump’s win was all but confirmed, the US Dollar plummeted across the board, seeing some of its biggest drops against some currencies in months. A Trump Presidency has been seen as a threat to global markets due to the unorthodox nature of his protectionist economic and foreign policies. This meant that the appeal of the US Dollar, as well as bets of a December Federal Reserve rate hike, plummeted on his win.
The biggest benefactors of the US Dollar’s plummet were its rival the Euro, seen as comparatively more stable in these conditions, as well as traditional ‘safe haven’ currencies such as the Japanese Yen and Swiss Franc.
The US Dollar’s movements were initially far sharper, but after Trump’s acceptance speech was deemed surprisingly ‘Presidential’ for the unorthodox candidate, markets cooled slightly.
GBP/USD’s uptrend was actually fairly narrow after its huge surge earlier in the morning, as investors preferred many other, safer currencies to the Brexit-worn Pound.
The Pound to Euro exchange rate plunged on Wednesday morning as markets reacted to the shock that unorthodox Republican Donald Trump would be the next President of the USA.
As markets sold off the US Dollar, they piled into the Dollar’s (currently more stable) rival the Euro. This left GBP/EUR lower, and the pair quickly lost half of last week’s gains.
The Euro is likely to continue performing well for the remainder of the week, as the shared currency is currently being seen as a safer, steadier investment than the US Dollar.
Australian Dollar (AUD)
The Pound to Australian Dollar exchange rate soared on Wednesday morning as traders took on a distinctively risk-off movement following the morning’s shock confirmation that unorthodox Republican Donald Trump had won the US Presidency.
As the Australian Dollar has been one of the best-performing risk-correlated currencies in recent weeks, this also meant it had the farthest to fall in the face of Wednesday’s market panic. With the future of trade in the world’s biggest economy now increasingly uncertain, commodity-bloc currencies were simply too risky for traders to remain invested in as they scurried to safer positions. While ‘safe haven’ currencies benefitted the most from this, the British Pound also gained considerably.
New Zealand Dollar (NZD)
The Pound to New Zealand Dollar exchange rate made solid advances on Wednesday morning as investors reacted to the shocking US election win of Republican Donald Trump.
Sterling advanced against the New Zealand Dollar both as the result of the market’s decisive risk-off movement and the market’s expectations for Thursday’s Reserve Bank of New Zealand (RBNZ) policy meeting.
The RBNZ is widely anticipated to be cutting the key NZ interest rate during the meeting, which will likely weaken the ‘Kiwi’ further unless markets perceive the currency as having been oversold following Trump’s market-shocking win.
Canadian Dollar (CAD)
The Pound to Canadian Dollar exchange rate easily advanced on Wednesday morning, as the oil-correlated and risky ‘Loonie’ took a double hit from the day’s news that Republican Donald Trump would be taking the White House in January.
The news shocked not only risk investors but also the commodity market. Prices of oil slipped due to reduced demand for commodities as investors pondered the future of US global trade deals. As a result, the Canadian Dollar performed poorly on Wednesday.
Disclaimer: This update is provided by TorFX, a leading foreign exchange broker, its content is authorised for reuse by affiliates.