Trump wins Clinton loses but does the Pound care

So… He did it. Donald J Trump will be the 45th President of the United States of America. The polls running up to the election were very close, but showed a narrow Clinton lead, however, as with Brexit, those polls proved to be wrong, and what is being called the “silent majority” voted the outspoken businessman into the White House. Hilary Clinton conceded defeat early this morning, and President-elect Trump took to the podium to thank his supporters, and to pronounce his vision of a united America moving forward.

What happens now is largely unknown – will all of his controversial promises; a wall between Mexico and the USA, restrictions on Muslims entering the country and repealing of Obamacare, all come to pass, or as with Brexit, will his supporters discover this was just rhetoric to stir things up and win votes? We shall see, but for us the only important thing is what impact is all of this having on the markets?

The answer is quite straight forward; the US Dollar is weakening due to the uncertainty of a new and very controversial and unpredictable President. The main moves for the Dollar are coming against safe-haven currencies such as the Japanese Yen and Swiss Franc as you would expect and the Euro/US Dollar seesaw is in full effect with the Euro gaining where the Dollar loses. However, it is worth noting that the initial surge of Dollar weakness and hence Euro strength is already slightly retracting, and for the Pound the impact against either currency is noticeable, but not as much as we might have expected. At the time of writing GBPEUR is around half a cent down and GBPUSD is around half a cent up…

This just goes to show that while stocks and non-Sterling USD crosses will likely be very volatile over the coming days and weeks, here in the UK; Brexit rules. Until we see the supreme court’s ruling on the government’s appeal of last week’s high court ruling on a parliamentary vote for Brexit, we are not likely to know when and how Brexit will happen, and while this uncertainty remains, the Pound will continue to be under incredible pressure.

Today’s UK trade balance figures, and New Zealand interest rate decisions will likely be ignored while markets focus on the Trump election, but make sure you stay in close contact with your Currency Index account manager to be kept informed of what is happening none the less.