What a difference a day makes – Euro rates best in over a month

13 November, 2016

Matthew Boyle

The last few days have certainly been interesting following the news that Donald Trump will be the next President of the United States. And as a result we have seen a large amount of movement in the currency market. Initially the reaction was a negative one following the news, with many US stocks falling and the USD weakening across the board. However this was only short-lived and quickly stocks recovered as did the USD as the shock and dust settled, and investors and traders alike start to digest and contemplate what Trumps presidency will bring. In what was a huge change of heart it seems, and largely  catalysed by Trumps fairly liberal acceptance speech, an impressive reversal took place. The S & P 500 for example saw the largest reversal since 2008, seeing the Dollar regain its losses and as a result the Euro in turn punished. Currently the Dollar sits only having only lost around 2 cents against GBP since the result, but against the Euro it has gained almost 3 cents. And as a result of this strong Dollar it has weakened the Euro against the Pound, giving now the best rates we have seen in over a month.

There a few suggestions as to why this slightly strange twist of events has happened, going against what many of the analysts had predicted prior to the election result. Some suggest that the similarities to Brexit have meant markets have learnt and it has encouraged traders to react faster which is why we have seen the rapid reversal. But perhaps what is more relevant is the general opinion that actually Trump would be good for business – encouraging growth through spending  heavily on infrastructure. Not only that but as part of his campaign Trump pushed heavily on Corporate tax breaks, which would stimulate the US economy and its stock market which poses a threat to the Euro, and is a large factor in why GBP>EUR rates have pushed up. Add to this the longer term pressure of the proposed December interest rate hike in the US are the contributing factors to why strangely and unexpectedly GBP>EUR rates are the best now they have been in over a month.

With little data out today sentiment will drive the market and rates, and take note that it is still early stages of what will be a long road. The USD is the largest traded currency in the market and this result will effect rates across the entire board for some time, as the market continue to digest and attempt to predict what this result will mean in the coming months and years. In the short-term whilst we have seen GBP>EUR rates spike, the long-term trend is still a downward one. Add to that the slightly unpredictable nature of Trump and these unexpected movements we have seen could be quickly reversed.

So if you have upcoming Euro requirements you may like to take advantage of the current rate which has increased almost 4% just in the last 48 hours.

Speak to your Currency Index broker today for some friendly and professional guidance on how to get the most out of your upcoming transfer.