Sterling has recovered overnight against the euro, climbing almost back to its two-year-plus highs. Against the US dollar, the pound has lost 1% over the past few hours.
To fix your rate in this period of extreme volatility, speak to your account manager on 020 7898 0541.
The big loser of the night has been the euro, as markets face up to years of tariffs on exports to the USA (as well as considerably higher defence spending). EUR/USD dropped to its weakest since July. The UK, selling services, would be less affected by tariffs. Key members of the European Central Bank (ECB) will be speaking later today, and it will be interesting to hear their reactions to the Trump re-election.
The dollar has gained, meanwhile, mainly because those tariffs are likely to raise inflation, and hence interest rates in the long term.
Away from the election, America’s ISM services PMI climbed from 54.9 to 56 last month. That surge was unexpected and means the survey is at its highest since August 2022.
S&P’s UK services PMI was revised up slightly from an initial 51.8 to 52 in October. This represents a slightly improvement for the key services sector but businesses cited an element of uncertainty leading up to last month’s autumn budget.
The big events of the rest of the week are the interest rate decisions tomorrow from the Bank of England and US Federal Reserve. They could easily be even more influential than the election result.
We will also get a new Halifax house price index early tomorrow.
