- The US dollar is still the strongest against the rest of the major currencies due to factors that reduce expectations regarding further US interest rate cuts, in addition to the possibility of Trump winning the US presidential elections.
- Additionally, there is increasing demand for buying the US dollar as a safe haven amid rising global geopolitical tensions.
- Accordingly, the downward trend for the GBP/USD pair remained the strongest and its recent losses may continue to reach the support level of 1.2944, the lowest level for the currency pair in more than two months.
- The GBP/USD pair is stable around the 1.2990 level at the time of writing the analysis.
What is expected for the GBP/USD pair if Trump wins the US elections?
According to Forex market trading. The price of the US dollar is rising with the increasing chances of Donald Trump winning on November 4, and accordingly, analysts say that there are more possibilities in the following weeks for the victory. In this regard, US betting markets, including Polymarket, Kalshi and PredictIt, have raised the implied probability of a Trump win to more than 60%. The high expectations of a Trump victory are reflected in the continued outperformance of the US dollar, which includes another drop in the GBP/USD exchange rate to below 1.30. In the forex market, the euro/dollar exchange rate has also fallen by half a percent over the past 24 hours to trade at 1.0827.
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Meanwhile, polls suggest the presidential race is much closer than the betting markets suggest. According to the Bookmakers Review, betting odds have accurately predicted a win for 77% of the expected candidates over the past 35 years.
Analysis from Barclays finds that at least 2% of the recent advance of the US dollar against the euro and the pound is due to positioning for the upcoming vote. As a result, a Kamala Harris win would see the premium fade while the status quo remains intact, sending the likes of GBP/USD and EUR/USD soaring.
In the event of a Trump victory, Barclays assumes markets will price in a 60% tariff on China as a near certainty and a 70% tariff on countries with large trade surpluses with the US. Earlier this week, analysts at Deutsche Bank said the likelihood of a “red victory” was also increasing, with Republicans gaining control of Congress and the White House. “We see the most bullish outcome for the US dollar being a red sweep and the most bearish outcome for the dollar being a blue sweep, but the magnitude of the moves is likely to be larger in the former case,” said George Saravelos, an analyst at Deutsche Bank. “We see the dollar rising across all currency pairs in a red sweep.” Trump, for his part, insisted last week that he has not changed his mind about pursuing a number of policies that are expected to support the dollar. In a new interview, Trump dismissed economists’ warnings that his proposed tariffs would have a negative impact on the economy and raise inflation. He said, “To me, the most beautiful word in the dictionary is tariffs,”.
A potential Trump president wants to impose a 60% tax on imports from China and a flat 10% levy on the rest of the world. This would be a repeat of the first-ever tariff-heavy agenda, and markets are taking notice. “It’s interesting that the dollar’s trajectory since its August lows closely follows the pattern that preceded the 2016 US election,” the analyst added.
Historically, the US dollar had surged in the wake of Trump’s victory in 2016. if history repeats itself, a significant rally could be in store in the coming weeks. Barclays’ model shows that the GBP/USD exchange rate is expected to fall to 1.23 in the event of a Trump victory. For EUR/USD, the target is set at 1.03. However, in case of Harris’ victory, EUR/USD is expected to recover to 1.11 in the following weeks. As for GBP/USD, the recovery is expected to extend to 1.33.
Technical forecasts for the GPB/USD pair today:
According to the performance on the daily chart, the general trend for the GBP/USD pair is still bearish. Technically, the stability below the psychological level of 1.3000 strengthens the bears’ control over the general trend and warns of a stronger downward move if the USD’s strength factors continue. The next support levels for the currency pair will be 1.2920 and 1.2800, respectively, which are sufficient to push the technical indicators towards strong oversold levels. On the other hand, and over the same time frame, there will be no initial break of the downtrend without first moving above the resistance of 1.3150.
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