The pound slumped in early morning trading in the financial markets today as the dollar surged on Donald Trump’s stunning victory in the US Presidential race.
Sterling lost about 1.5% with the pound dollar rate falling to $1.285 after the key swing state of Georgia was declared for the Republican candidate making it almost certain he would be returned to the White House.
Investors piled into the dollar on expectations of a huge expansionary boost to the US economy under the 47th President
Bitcoin also rose sharply in overnight trading in Asia, topping $75,000 at one point to hit a record high of $75,060 Traders believe that Trump will take a softer line on cryptocurrency regulation.
Kyle Chapman, FX markets analyst at City trading services firm Ballinger Group said: “The dollar has rocketed across the board in its best day in four years, as markets position for an inflationary and tariff-heavy future for the US economy. With Georgia, North Carolina, and Pennsylvania having been picked up and the New York Times projecting a more than 95% chance of a Trump victory, the market has moved to fully price in a win for the former president.
“G10 FX is a bloodbath this morning. The euro is the worst hit, with markets anticipating that the open, stagnant eurozone economy will face some of the biggest headwinds in staging a recovery.
“The ECB has become chiefly concerned about growth, and so the negative shock to its open economy should speed up the pace of rate cuts and set in stone a path to stimulative monetary conditions. Meanwhile, the Canadian dollar has been spared much of the losses, presumably as markets expect a short-term US growth boost to spill over to its northern neighbour.”
However, US Treasury yields rose sharply on fears that Trump’s fiscal plans and strong stance on immigration will usher in higher inflation. By 8am London time the yield on the US 10 year Treasury note was up 11 basis points at 4.399%.
