The GBP/USD is one of the world’s major currency pairs that has experienced many fluctuations in value over the past few months. Some of this was expected due to events scheduled in the economic calendar, while others came out of the blue.
Donald Trump’s victory in the US presidential election created a lot of chaos in many markets and saw the GBP/USD currency pair fluctuate throughout. It was always going to experience ups and downs but the somewhat surprising outcome has made the pair even more volatile than first predicted.
Before the Election
In the run-up to the election there was understandably a plunge in the US dollar’s value a few days before the election, with traders worried about how its outcome would affect the currency’s value. This therefore saw a strengthening for the pound, not just against the dollar but the euro and a few other currencies as well.
A day or two before the election the dollar could have made gains. However, with the polls too close to call (with most wrongly believing Clinton to have the edge), the GBP/USD continued to perform poorly, with a surge in demand for the pound later on helping it capitalise.
Immediately After
Trump’s victory may not have been good news for everyone, but it appears to have been positive for the pound’s value. Just 24 hours after the result was announced, the pound to dollar exchange rate reached 1.24. This was good news for many forex UK based traders who will have profited from its growing value and appreciation against the dollar.
The dollar also defied many expectations though, not plummeting as far as many feared. The GBP/USD currency pair remained strong throughout huge currency swings elsewhere and is continuing to strengthen, partly because of Trump’s known love of the UK and claiming they would be one of the first nations he would arrange a trade deal with.
Other Factors
It wasn’t just the US election which led to many fluctuations between the British pound and American dollar. The ongoing Brexit negotiations have continued to have an impact, with Article 50 news and leaked memos causing some uncertainty. While a predicted interest rate hike in the USA has also made many traders and investors wary.
In the near future, these events and others such as Trump actually entering the White House and Article 50 being triggered, will no doubt play a further part in the GBP/USD price fluctuations. Stay on top of such political and financial news to enhance your chances of profiting in the forex markets.
