- Posted by Shyam Gokani in Uncategorised
- November 8, 2016
- No Comments
Sterling rose this morning in early trade against a nervous dollar as the perceived status quo candidate Hillary Clinton and Donald Trump approached the finishing line in a tight presidential election race.
The pound rebounded 0.3 percent, having lost ground on Monday when the dollar surged on a polling boost for Democrat Clinton after the FBI concluded no criminal charges were warranted against her over her use of a private email server.
Sterling climbed almost three percent last week, its best weekly gains in seven years as the dollar was hit by signs that a Trump victory might be on the cards.
While the pendulum has since swung back towards Clinton, investors are approaching U.S. election day with caution.
Politics have dominated recent currency moves, with the pound’s rally last week also supported by a High Court ruling that the government needed parliamentary approval to start the process of Britain’s divorce from the European Union.
Sterling is still down more than 16 percent against the dollar since the British vote in June to exit the EU. With memories of that unexpected outcome still fresh, traders are treading lightly.
I don’t think we’re quite seeing the same level of confidence in the markets ahead of this election but still, it does appear we’re quite vulnerable now to a Trump victory, which is not as ludicrous as the betting odds would suggest.
While economic issues have taken a back seat, there will be eyes on Tuesday’s UK September industrial output data, which will add to a so far mixed picture of Brexit’s impact.