Trump Presidency becomes a Possibility, GBP USD Exchange Rate Soars

Modified: Wednesday, 2 November 2016 16:05 BST - Written by Ben Hughes

STORY LINK Trump Presidency becomes a Possibility, GBP USD Exchange Rate Soars

The GBP USD exchange rate broke past the 1.23 barrier for the first time in a couple of weeks today as growing political uncertainty ahead of the US election weighs on the US Dollar (USD).

Pound US Dollar (GBP USD) Exchange Rate Climbs as Clinton Faces Email Probe

The Pound US Dollar GBP USD exchange rate has continued advancing today as the ‘Greenback’ was weakened as the presidential race became tighter.

After enjoying a substantial lead in polls in October, Democratic presidential candidate Hillary Clinton has found herself fighting head to head with Republican rival Donald Trump in the run up to election day after her campaign was marred by a new FBI investigation.

The announcement that the FBI had opened a new inquiry looking into Mrs Clinton’s use of a private email server for official correspondence during her time as US Secretary of State has caused polls to narrow, giving Clinton just a two point lead against Trump.

The prospect of a Trump presidency has weighed on the US Dollar as investors are uncertain of the impact the inexperienced Trump may have on the US economy, causing traders to flee the US Dollar in droves, flocking to other ‘safe haven’ currencies like the Japanese Yen (JPY) as they wait for the dust to settle.

Pound Up as Construction PMI Impresses

The Pound was also strengthened by the release of Markit’s latest UK construction PMI report, which rose to 52.6 in October up from 52.3 the month before. This was markedly better than forecasts, which predicted it would drop to 51.8 and helped Sterling push past the 1.23 barrier against the US Dollar.


Meanwhile any attempts of recovery by the US Dollar were hindered further by release of US ADP employment figures which unexpectedly fell from 154k to 147k in October, falling noticeably short of predictions that it would rise to 165k.

GBP USD Exchange Rate Forecast: Central Bank Rate Decisions Due

Both the Bank of England (BoE) and the US Federal Reserve will hold meetings determining whether their respective economies require any changes to interest rates over the next 24 hours. While both are forecast to hold them at current levels there is a chance of increased volatility in the hours before.

The BoE decision is likely to cause the most movement in the GBP USD exchange rate as investors continue to speculate on whether comments made last week by UK Chancellor Philip Hammond about allowing for additional monetary stimulus will correlate in the bank slashing interest rates.

The Federal Reserve rate decision meeting later today is likely to prove uneventful for the GBP USD pairing however as markets have already priced in a predicted rate freeze this month was they anticipate that the Fed will instead hike rates in December.

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