By Luke Dyson
We have seen a big jump in dollar strength as of this morning, with Donald Trump now taking a high probability of winning the Presidential Election, having now won key swing states to virtually secure the White House.
It isn’t over as of yet, but a high likelihood of a Trump victory.
As a result the dollar is rapidly strengthening due to Trumps anti-globalist , low tax agenda approach.
These tariffs and tax cuts are massively inflationary and could slow the rate of interest rate cuts by the Federal Reserve moving forward. In turn boosting dollar strength.
Closer to home, in recent months we have seen a particularly strong pound against the euro, however how much longer will this last?
We have the Bank of England interest rate decision tomorrow at 12pm, It is believed there will now be a less aggressive approach to cutting interest rates than previously expected following on from the recent Budget.
UK Chancellor Reeves unleashed an inflation-hiking set of spending and borrowing plans. With a 6.7% rise in minimum wage but also hikes in national insurance tax’s for businesses, making consumer prices higher as things pan out.
These changes are relatively positive for sterling moving forward, however depending on the size of the rate cut could impact the market in a negative way if the cut is larger than the market has priced in and is expecting. If you have any up and coming currency purchases whether euros or dollars, get in touch with A Place in the Sun Currency to discuss a strategy to take advantage of the current rates, or at least limit your exposure to the market. We will likely see some big changes in the weeks to come.