The US Dollar has weakened across the board as have US based indices after US Presidential candidate, Donald Trump has closed the gap on Hillary Clinton in many polls, and in some cases actually taken the lead by 1 percentage point.
Yesterday an ABC poll came out putting Trump in the lead, and the polls are being taken seriously as the global markets around the world have been sold off as Trump is not generally the favoured candidate within financial markets.
We’re now only 7 days away from the actual vote and I’m expecting a bumpy ride for exchange rates as certainty is what currencies crave and there is likely of that on offer currently. A Trump presidency could create some frosty relationships between important US figures as the presidential candidate has recently criticised the Fed Reserve Bank after their hesitancy to hike interest rates, despite a healthy looking economy.
In terms of the Greenback’s relationship with the Pound, despite the election just around the corner over the states I still think the Pound is under more pressure due to the ongoing Brexit fallout. Tomorrow is an important day in the financial calendar as the Monetary Policy Committee will announce their most recent interest rate decision. I’m expecting the governor of the BoE, Mark Carney’s decision to extend his stay for another year to 2019 to dominate the meetings questions and answering session.
Inflation is also likely to be a key taking point as it’s taken quite a boost lately due to the Pounds sudden fall. It could become problematic If it continues to climb at it’s current rate and it will be down to the BoE to manage that potential issue without damaging the UK economy.