The pound remained stable against the dollar as the dollar gained momentum following Donald Trump’s clear victory in the US presidential election.
Analysts note that strong US economic indicators support the strength of the dollar. Pepperstone strategist Michael Brown said: “The USD bullish case remains compelling, with US economic outperformance still clear for all to see and risks around the FOMC outlook becoming somewhat more bilateral towards 2025, in the midst of Trump’s reflationary strategy. fiscal agenda and the inflationary risks posed by the imposition of tariffs.”
Further boosting the dollar’s rise was the strong performance of the University of Michigan’s US consumer confidence index, which hit a six-month high in November. The US Dollar Index (DX-Y.NYB), a measure of the dollar’s value against a basket of six major currencies, continued its upward trajectory, reaching around 105.29, a four-month high.
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Looking ahead, UK wages and employment data due on Tuesday could provide further direction for the pound, as the Bank of England monitors wage growth for potential rate decisions. Any sign of easing wage pressures could strengthen the case for a rate cut in December.
Against the euro (GBPEUR=X), the pound sterling rose and is trading at 1.2068 euros.
Gold prices fell in early European trading, pressured by a strengthening dollar amid Trump’s presidential victory.
Spot gold lost 0.1% to $2,668.41 an ounce, while U.S. gold futures fell 0.6% to $2,678.30.
Trump’s victory has introduced uncertainty about the pace of future rate cuts by the US Federal Reserve, strengthening the dollar and weighing on dollar-denominated gold prices.
“This rally in the dollar and yields has put pressure on gold, which traditionally falls as real interest rates rise, reflecting lower demand for safe haven assets in the near term,” said analyst Matthew Jones. of precious metals from Metals, based in London. Solomon Global trader. “However, from a long-term macroeconomic perspective, the future is ‘as good as gold.'”
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Market participants may act cautiously ahead of upcoming US inflation data and speeches from key FOMC members, including Federal Reserve Chair Jerome Powell. These developments could add volatility to gold’s current trajectory, especially after gold retreated from its all-time high of $2,800 per ounce on October 31.
However, current geopolitical tensions in the Middle East and economic uncertainty could help stabilize the gold price. Israeli military actions in Lebanon, coupled with elevated regional risks, may further underpin demand for safe-haven assets like gold.