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Pound Shows an Increase with a Promising UK-US Deal

November 11, 2016
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After Brexit, the value of British Pounds dropped massively. The Brexit result also shook the London stock market which dropped by 3.2% immediately after the vote. Economists were expecting such a major blow for the Pounds when the US election results were announced. Surprisingly, the Pounds continued to strengthen against the dollar because of the promises made during the election campaigns.

The trade advisor for Donald Trump, Dan DiMicco said during the election campaigns that the UK would get a priority while reconsidering the trade deals. He said that UK is a close friend of the US and UK will be pushed to the front of the queue of foreign trade agreements. This spiked the interest of the investors who are hoping that US will increase its interest rates.

In hopes of good times for the British Pounds, the currency gained significance after the announcement of Donald Trump’s win. On Wednesday afternoon, the British Pounds advanced 0.8% against the US dollar and 1.6% against the Euro. This positive exchange rate movement was witnessed even though many top listed companies experienced a decrease in wealth as London FTSE 10 dropped 2%. Banks, life insurance companies and asset managers were major losers on UK FTSE.

However, the economic experts in the UK have warned that the trade agreements between UK and US will be less favorable for the UK. There is uncertainty in the global markets because the new president-elect Donald Trump lacks any political experience and nobody is sure what his plans are.

the image from (iStockphoto)