The pound dropped at its sharpest pace against the dollar in nearly two years and stocks have jumped after Donald Trump said he had won a “magnificent victory for the American people” in the US presidential election.
Sterling slumped as much as 1.4pc against the dollar to $1.285, its lowest level in two months, as traders scrambled to take advantage of so-called “Trump trades” in the wake of the US presidential election.
The dollar was up as much as 2pc against the euro, which was worth $1.07, and jumped 1.8pc versus the yen.
Investors are betting on a strong dollar as Mr Trump heads for the White House, reasoning that his pledge to introduce harsh tariffs and spend freely will drive inflation and keep US interest rates high.
Against a basket of major currencies, the dollar index surged at its fastest pace since 2020.
Stocks also jumped in the wake of the vote. The FTSE 100 leapt 1.3pc in London, while the midcap FTSE 250 jumped 1.8pc after the Republican candidate took the crucial swing states of North Carolina, Pennsylvania and Georgia ahead of Democrat candidate Kamala Harris.