The dollar has fallen at its fastest pace in three months as investors scaled back bets on Donald Trump winning the presidential election.
The US currency fell 0.6pc – its steepest drop since August – against other major currencies amid a decline in bond yields as Americans are due to head out to vote on Tuesday.
The pound was up 0.3pc against the dollar at $1.297 as the yield on 10-year US Treasuries – the return the government promises to pay buyers of its debt – fell 11 basis points to 4.27pc.
Mr Trump’s policies on immigration, tax cuts and tariffs may put upward pressure on inflation, bond yields and the dollar, analysts believe, while Ms Harris is seen as the continuity candidate.
Deutsche Bank analyst Jim Reid said the volatility was because “tomorrow will shape the direction of the world economy and geopolitics for the next four years”.
Stock indexes on Wall Street fell after a poll indicated Kamala Harris is ahead in the key state of Iowa in the race for the White House.
Meanwhile, an ABC News and Ipsos poll gave the Democratic candidate a 49pc to 46pc edge across the nation.
Betting site PredictIt showed Ms Harris at 53 cents compared to Mr Trump on 51 cents – what investors are willing to wager for a chance to win $1 – compared to 42 cents to 61 cents just a week ago.
Erik Nielsen, group chief economics advisor at UniCredit, told Bloomberg TV: “Somehow markets persuaded themselves that Trump was well ahead and had been priced as if it was quite a clear victory for him, which seems crazy.
“What you’re seeing now is a realisation that we got ahead of ourselves.”
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