GBP EUR Exchange Rate Surges as Euro Unexpectedly Pressured by Shock Trump Victory

November 10, 2016 - Written by John Cameron

STORY LINK GBP EUR Exchange Rate Surges as Euro Unexpectedly Pressured by Shock Trump Victory

The GBP EUR exchange rate rose yesterday as the Euro was pressured by an unexpected rally in the US Dollar (USD) following the shock result of the 2016 US presidential election.

Pound Euro (GBP EUR) Exchange Rate Upbeat as Trump becomes President Elect

While Republican candidate Donald Trump shocked the world by defying the odds on Tuesday to become the next president of the United States, it didn’t quite cause the global meltdown that had been predicted before the election.

Instead the markets reacted positively to Trump’s reserved victory speech, in which he reined in his usual campaign rhetoric to instead talk about uniting the country after what had been one of the most divisive election races in US history.

Traders have also begun to speculate on the impact a Trump presidency and a Republican-controlled congress will have, with some investors anticipating that he may be able push thorough legislation to help boost the economy. As Kit Juckes of Societe Generale explains;

‘It is widely expected that President Trump will be able to enact tax cuts, particularly for corporations that will be positive for growth and will boost inflation.’

The newfound confidence in a Trump presidency has allowed the Pound (GBP) to profit against the Euro (EUR) over the past couple of the days as the single currency has been placed under substantial pressure due to its status as the most traded currency against the US Dollar.

Trump Win May Cause 'Brexit' boost for Pound

The Pound has also been bolstered by the unexpected win for Trump, thanks to claims that the US would ‘absolutely’ look to create a trade agreement with the UK after 'Brexit', according to Trump’s trade adviser, Dan DiMicco.

However there are still concerns of how much Mr Trump would prioritise creating an agreement with the UK, considering his almost laser focus on trade with China during his campaign and that one of his major points was his opposition to free trade agreements, which he blames for the deterioration of the US industrial sector.

GBP EUR Exchange Rate Forecast: UK and Eurozone Data likely to be Ignored While Markets Settle

Most movement in the GBP EUR exchange rate is likely to be dictated by market sentiment towards the Trump presidency for the foreseeable future as investors speculate on the far-reaching impact his term will have on the global economy. As evidenced by the negligible impact of the impressive RICS house price balance report, which surged from 18% to 23% in October, had on the Pound earlier today.

It is equally likely that tomorrow’s German consumer price index will be met with a similar shrug from investors as they wait for the dust to settle from Tuesday’s shock result, before they begin to take heed of data once again.

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TAGS: Pound Euro Forecasts