Markets Brace for US Elections GBP EUR Exchange Rate Flat

Modified: Tuesday, 8 November 2016 15:35 BST - Written by James Fuller

STORY LINK Markets Brace for US Elections GBP EUR Exchange Rate Flat

The GBP EUR exchange rate is continuing to trade flatly, remaining close to the levels it reached late last week as both currencies are suppressed by the US presidential election.

Pound Euro (GBP EUR) Exchange Rate Overshadowed by US Election

Despite some of yesterday’s pressure from the rally in the US Dollar (USD) having waned, neither the Pound (GBP) or Euro (EUR) have managed to advance today as markets continue being dominated by speculation over the US election as America heads to the polls today to vote for its next president.

The currency pairing, like many of its peers today has been reluctant to make any movement ahead of the election result. Despite a last minute boost in the polls for Democratic candidate Hillary Clinton, investors still fear the possibility of her Republican Rival Donald Trump pulling off a surprise win. As Barclays points out;

‘Similar to the pre-Brexit landscape, the risk premium on European equities is already near all-time highs, suggesting that investors are somewhat braced for an adverse economic outcome.’

Markets are likely to explode tomorrow morning when the result is announced however, which is likely to cause some volatility in GBP EUR.

Pound Sterling (GBP) Exchange Rates Boosted by High Court Ruling

With neither currency able to advance during the US elections, the Pound has continued to trade at its highest levels against the Euro since the Sterling flash crash around a month ago.


Market sentiment towards the Pound was markedly improved after a High Court ruling denied the UK government’s ability to trigger Article 50 of the Lisbon Treaty without first winning a vote in parliament. Traders reacted positively to the news on the belief that the ruling will help to hinder the government from pursuing a ‘hard Brexit'.

UK and Eurozone Data Ignored, GBP EUR Exchange Rate Movement Limited

Movement in the EUR GBP exchange rate has been mostly negligible today as investors largely ignored the lacklustre data released by both markets.

Germany posted some disappointing industrial production data first thing this morning as figures dropped further than expected, falling from 2.4% to 1.2% in September and notably short of predictions of 2.0%.

Meanwhile the UK industrial production report was even more disappointing as it fell to 0.3% in September, down from 0.7% the previous month, after it was forecast to rise to 0.8%.

GBP EUR Exchange Rate Forecast: Investors Likely to Remain Dovish ahead of US Election Result

The GBP EUR exchange rate is highly likely to remain unchanged up until the result is released tomorrow morning as investors remain on the fence.

A win for Trump is likely to cause the most movement between the pair as the Euro is likely to gain the advantage due to its status as the US Dollar's most traded currency partner, which may see traders flock to the single currency as they flee the uncertainty of a Trump presidency.

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