Above: The Republicans have the Senate

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Pound Sterling fell sharply as results from the U.S. election suggested Donald Trump and his Republican Party were on course for victory.

The all-important key swing state of Pennsylvania has been called for Donald Trump, assuring his path to the White House.

CNN has called Pennsylvania for Donald Trump after Fox News made the same call. It effectively means that the Republican candidate has won the 2024 presidential election and puts the White House out of reach for Kamala Harris.

Trump’s win comes alongside a Republican win in the Senate, and they are anticipated to retain the House of Representatives easily.

This means the ‘red sweep’ outcome – the most USD-bullish outcome – has come to pass.

Trump’s pro-tariff and low-tax agenda will now be unfettered by opposition.

Trump’s agenda of tariffs and tax cuts is inflationary, which will lower the tempo of future interest rate cuts at the Federal Reserve, which is bullish for the Dollar.

“The US dollar is trading higher against almost every currency in the world overnight on the news of the big outperformance in the polls from Donald Trump. Not only are markets positioning themselves for a comfortable Trump victory in the electoral college, but the prospect of a Republican controlled Congress, which is key in determining the ability of the incoming president to force policy changes through the US government,” says Matthew Ryan, Head of Market Strategy at Ebury.

His pro-growth agenda (which will involve a significant rise in the USA’s debt) will also boost the ‘American exceptionalism’ trade, in which global investors buy all things American, including its currency.

The Pound to Dollar exchange rate fell to 1.2850 after Trump won the important swing state of Georgia and it was confirmed the Republicans had taken the Senate.

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The red sweep outcome was considered by analysts to be the most bullish outcome for the Dollar, with some saying the currency could ascend by approximately 5%.

“I think in terms of outcomes tonight, I would expect GBP to be challenging 1.26 should Trump get announced,” said a trader at JP Morgan.

“The currency market has realised its previously indicated tendency: it firmly believes that the Trump presidency will be USD-positive,” says Ulrich Leuchtmann, Head of FX and Commodity Research at Commerzbank.