Pound Euro Exchange Rate Reaches 1.20 as Donald Trump Win Boosts Dollar

November 7, 2024 - Written by John Cameron

STORY LINK Pound Euro Exchange Rate Reaches 1.20 as Donald Trump Win Boosts Dollar

The Pound Euro (GBP/EUR) exchange rate surged on Wednesday after the US’s general election results confirmed Donald Trump as the new US President.

At the time of writing, the GBP/EUR was trading at around €1.2004, up roughly 0.6% from Wednesday’s opening levels.

The Euro (EUR) plunged against most of its peers on Wednesday, significantly weakened by the outcome of the latest U.S. election.

Wednesday morning's final results revealed that Donald Trump secured a second Presidential term, becoming the 47th President of the United States.

Following the announcement, the U.S. Dollar (USD) surged, while the single currency plummeted due to their inverse relationship.

Ipek Ozkardeskaya, Senior Analyst at Swissquote Bank, commented:

‘The Euro – which is one of the most vulnerable major currencies to Trump presidency due to the tariff threat – tanked to 1.0718 against the Greenback.’

The Pound (GBP) weakened against most currencies on Wednesday, also stumbling in response to the announcement of Trump's victory.

The outcome of the U.S. election raised worries for GBP exchange rates, with some experts indicating that a Trump win could have adverse effects on the UK's economy.

Ahmet Kaya, an economist at NIESR, commented:

'The UK's status as a small, open economy makes it particularly vulnerable to external shocks.'

This viewpoint undermined Sterling against other currencies on Wednesday, with thin trading volumes in the UK amplifying the impact.

GBP/EUR Forecast: BoE Interest Rate Decision to Drive Movement

Moving ahead, the primary catalyst for the Pound Euro exchange rate on Thursday is expected to be the Bank of England's (BoE) impending interest rate decision.

Markets broadly expect a 25-basis point rate cut, which will likely prompt GBP investors to closely examine the central bank's guidance for hints about the future course of UK monetary policy. Any dovish signs could potentially undermine GBP
exchange rates.

Shifting focus to the Euro, the Eurozone’s latest retail sales figures are predicted to show a slight increase in September, which could lend some modest support to the Euro.

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TAGS: Pound Euro Forecasts