The Trump Effect

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The financial markets were on the edge of their seats last night waiting for the result of the Trump/Clinton election. As the Trump victory started to reveal itself the Asian stock markets started to show big drops. It was the fear that Trump would ‘tear up trade agreements’ and that he would be a disasterous president. The Mexican Peso fell to record levels (21 Peso to the USD from 18 only yesterday). It all looked like the United States was on the verge of a 24th of June style Brexit collapse in the dollar value.

What actually happened is that in a once bitten twice shy show of foresight the markets had already prepared for the result. Where money had fled the US markets in to Swiss Francs, Gold and even Bitcoins after the US markets it started to flow back into the US.

The stock exchange in London started the day 1.6% down but already it has climbed back up to just 0.5% down and it is only mid morning.

I think part the reason we have not seen a dramatic fall in the value of the US Dollar is down to Trumps victory speech where he abandoned all his ‘outsider’ firebrand rhetoric and started to conform to the generic US President mould. The rest is down to the fact that this was not too unexpected. The polls, regarding elections, are now so inaccurate that they are irrelevant. We had the conservative victory when a hung parliament was predicted by the polls, we have had a leave victory when remain was ahead in the polls and now a Trump election when Clinton was ahead.

AI Robot predicted result

The entire polling industry has to take a strong hard look at its processes as right now we are probably better off asking an octopus or MogIA the AI robot that reads Facebook.

And the Pound?

So what does this mean for the Sterling? Right now, absolutely nothing! IF the US Dollar had fallen sharply and stayed down over the coming months it would have countered a lot of the inflationary pressures on food and energy prices. As it is this does not help anyone at all.

Posted by Peter Rudin-Burgess

Peter Rudin-Burgess

Peter is one of the founding partners for both Compare Holiday Money and Currency Buy Back. He regularly blogs on financial matters and writes content for a number of blogs in the travel industry.

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