US Election day, what does it mean for the US Dollar?..

US Election Day!

The global pandemic has dominated news headlines around the world for the majority of 2020 and unlike most US Presidential elections, the run up to the latest race to the White House has been overshadowed by Covid-19.

The race to be, what some view as the most powerful position in the world has the current president and Democratic leader Donald Trump aiming to win a second term in the White House and continue his efforts ‘To Make America Great Again’. His opposition and Republican leader Joe Biden hopes to win enough votes to remove Trump from the hot seat and take his place in the White House as the next and 46th President of the USA in February 2021.

Current polling figures have Joe Biden as the favourite to win the votes needed to takeover, but as with the 2016 election when the polls predicted Hilary Clinton would take over from Barack Obama; we know Donald Trump made a late surge on voting day and clinched the votes in the key states to confirm his election.

So, what does this mean for the value of the US Dollar, if either candidate wins?

This has been the key question for all of our US dollar buyers and sellers in recent weeks. With Joe Biden leading the polls, the current market is expecting a Biden victory when the votes are counted which will be confirmed late Tuesday night or Wednesday morning. Over the last month we’ve seen little movement between the dollar value against the pound with highs of 1.3170 seen for the pound against lows of 1.2840, a range of only 2%. This could suggest that the market is quietly expecting a Biden win. However, a Trump triumph could spark some market moves for the USD if he succeeds against the odds for his second term.

The UK prepares for Lockdown 2.0, and hopes for a Brexit deal

Sterling fell yesterday after England announced the conditions for a new 4-week lockdown, but news and hopes of a Brexit deal could be nearing, preventing currency to decline further.

PM Boris Johnson announced over the weekend that a 4-week nationwide lockdown was required as a last resort to bring down the growing numbers of Covid-19 cases. The UK has registered more than 20,000 new cases a day, with scientist warning the death toll would rise significantly over the winter if action isn’t taken now, leading the PM to put the UK into another lockdown.

The news of the lockdown saw the pound fall 0.4% against the dollar and 0.3% against the euro. Analyst have said the impact on sterling could have been much worse as a result of lockdown 2.0 if it was not for investors positioning more so for optimism in view of a Brexit deal as we approach the final weeks of talks.

Brexit talks have been ongoing for nearly as long as Donald’s Trumps term in the White House, could both be coming to an end at the same time? Britain is working with EU to close significant gaps in trade deals, with both sides seen as keen to avoid a damaging breakdown in trade when the transition periods ends on 31st December 2020. We’ve had countless false dawns with Brexit talks over the last 3-4 years, so with only weeks to go now it’s surely the time for agreements to be made to avoid a messy divorce which favours neither side. Any further encouragement or confirmation of a deal being sealed is likely to prove positive for the pound and across a range of currencies.

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