Pound sterling becomes best performing major currency in the world after Donald Trump win

Sterling has climbed against all of major currencies this week and broke the $1.26 barrier against the dollar on Friday

Zlata Rodionova
Friday 11 November 2016 12:06
Donald Trump's victory has prompted outrage and bewilderment in Europe
Donald Trump's victory has prompted outrage and bewilderment in Europe

Investors’ concerns about political shifts in the eurozone and Donald Trump’s shock election victory have benefited the pound as it became the best performing currency this week.

Sterling has climbed against all of major currencies since last Friday and broke the $1.26 barrier against the dollar for the first time in five weeks. It is also its highest level since the “flash crash” that caused a massive drop in the currency’s value in early October.

Trump election success on Wednesday seem to have shunted concern over Britain’s future outside of the EU as investors shifted their focus to political events in the eurozone, including next month's referendum in Italy, and Trump's election success.

Theresa May 'looks forward' to working with Donald Trump

The pound hit an intraday high of $1.2673 and is now on course for its best fortnightly performance in eight years. The currency has also gained ground against the euro, trading at €1.161.

This marks a reversal from October when the currency became the worst performer trailing behind 150 currencies.

Tony Cross, analyst at TopTradr, said fears of European political instability are pushing sterling up.

He said: “Granted it’s starting from a low base given the beating the currency took, both from the shock Brexit vote and the flash crash just over a month ago, but this is increasingly looking as if it’s been overdone.”

“Critically there’s growing concern that we’ll see a rising tide of nationalism across continental Europe, with French elections in the New Year a real cause for concern, pushing EUR/GBP down to below 0.8700 for the first time since late September.”

Alexandra Russell-Oliver, Caxton FX analyst, suggested sterling is also benefitting from the prospect of the US and the UK remaining close.

She said: “The pound may be receiving additional support as President-elect Trump emphasises that the US and the UK will continue to enjoy a ‘very special’ relationship.”

President-elect Donald Trump on Thursday invited Theresa May to visit Washington in a phone call in which both stressed the importance of US and UK relations.

The rising pound sent London shares sliding with Britain’s FTSE100 losing 1 per cent dragged down by international firms who earn in dollars.

Manuel Oliveri, a currency strategist at Credit told Bloomberg: “There is just a bigger theme now and we just don’t have a trigger for more pound downside here.”

Register for free to continue reading

Registration is a free and easy way to support our truly independent journalism

By registering, you will also enjoy limited access to Premium articles, exclusive newsletters, commenting, and virtual events with our leading journalists

Already have an account? sign in

By clicking ‘Register’ you confirm that your data has been entered correctly and you have read and agree to our Terms of use, Cookie policy and Privacy notice.

This site is protected by reCAPTCHA and the Google Privacy policy and Terms of service apply.

Join our new commenting forum

Join thought-provoking conversations, follow other Independent readers and see their replies


Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged inPlease refresh your browser to be logged in