The US Dollar has strengthened this morning as the US presidential election results are showing a tighter race than predicted and fears grow of a protracted election.

The votes are still being counted in some key swing states and forecasts are still leaning towards a Biden victory but it’s still too close to call. However, Trump has said this morning that he feels he’s won, making unfounded claims of fraud, demanded that counting stops immediately, and stating he will challenge things at the Supreme Court.

As a result, the GBP/USD has had a bit of a rollercoaster ride overnight. Markets had initially started to price in a Biden victory which caused a spike higher in the rate but this quickly turned around as a Democrat landslide victory has, so far, not materialised. A Biden victory is generally expected to weaken the USD as it will increase risk appetite, as he’s expected to announce a large coronavirus aid package and also reduce the trade tensions with China which have been keeping the dollar more supported. Markets also dislike uncertainty and Trump’s comments this morning point towards a delay in finding out who the next president will be.

The GBP/USD had spiked up around 2-cents from yesterday’s low but has since fallen towards yesterday’s low and remains under 1.30. The GBP/EUR remains relatively buoyant and trades close to its 8-week high, although off yesterday’s high (as Sterling feels the impacts of risk aversion more than the Euro).

Traders eyes will be glued to their screens to see how the remaining vote counts come in. If Biden can win more of the key swing states and put up a more significant vote tally, then we would expect the USD to lose back some ground as it would be more difficult for Trump to argue against that. However, if the results are extremely close, then we would expect Trump to battle hard to continue to call the White House his home and therefore continue the uncertainty.