The USD has weakened as the count in the key US States continues with Joe Biden looking more likely to win the keys to the White House.
Biden has now reportedly taken the lead in Georgia with 99% votes counted and he continues to lead in Nevada and Arizona (albeit Trump has been closing the gap in Arizona). Trump still has the lead in Pennsylvania, although the gap is narrowing as more postal votes are counted.
Trump is continuing to declare fraud in the voting and stating he would win if the “legal votes” are counted and the “illegal votes” are removed. His claims are still unsubstantiated but it seems likely he will continue to press for legal action. With Biden appearing to pull away in the counts, it seems unlikely Trump will have much chance of success with the courts and the markets appear to be feeling that it’s only a matter of time before we get a clear result. This is increasing risk appetite and therefore weakening the USD.
In other news, the Pound has been supported by combined action from the Bank of England and the UK government which has increased support to the economy as the new lockdown starts. The BoE kept interest rates on hold but increased their quantitative easing measures by another £150 billion (to a total of £895 billion). Rishi Sunak also gave businesses and employees some welcome relief by announcing an extension to the furlough scheme to the end of March 2021. This double action has been taken favourably by pound buyers as it should help UK’s recovery from the coronavirus crisis.
As a result, the GBP/USD is now 2 cents higher from Wednesday’s low and trades towards the top end of where it’s been over the past couple of months. The EUR/USD is pushing higher and has already risen 1.1% since yesterday, pushing it towards the top of its recent range.
Next up we have the US non-farm payroll figures this afternoon, but it’s clear the market will be more focused on the final vote counts as the final states finish their vote counting. Looking further ahead, once the dust settles on this US election, Brexit is likely to come back to the fore.