Pound’s Trump-Spurred Rally Already Shows Signs of Petering Outby
Aside from dollar, pound was sole winner from U.S. election
Yet Rabobank says its gains were an ‘overshoot on the upside’
The only currency to have risen versus the dollar since Donald Trump’s election win is back to cementing its status as one of the worst performers of 2016.
The pound tumbled, paring three days of gains after the Republican candidate became the U.S. president-elect. Sterling was the surprise winner from Trump’s victory as concern that political tension is on the increase outside Britain relieved the pressure caused by the June vote to quit the European Union.
“What we saw in sterling at the end of last week was a little bit of an overshoot on the upside,” said Jane Foley, a senior currency strategist at Rabobank International in London. “Since Brexit, the markets have been short sterling, and obviously this means there was the potential for the pound to bounce higher. It’s difficult to say it’s going to carry on.”
The pound fell 1.1 percent to $1.2457 as of 4:30 p.m. London time, tumbling from the highest in a month though it’s still up 0.6 percent since Nov. 8. All told, the U.K. currency is down 16 percent since the EU referendum, and has suffered the third-biggest loss among major peers this year.
Sterling gained 0.2 percent to 86.05 pence per euro, extending last week’s 3.2 percent advance, which was its best performance versus Europe’s single currency since July 2015.