As the year draws to a close, the anniversary of Biden’s time in office also draws ever closer. Partisan politics will likely define your view on the relative success/failure of this term. In fact, there is significant momentum behind voices against incumbent leaders/parties on both sides of the Atlantic, here in the UK and in the USA. Of recent presidents, Joe Biden has the lowest satisfaction rating amongst the US electorate bar one former President. Yep, you guessed it, Barak Obama. Just kidding, yes, it’s Trump’s groundbreaking 1-year in 37% versus Joe Biden’s 42%. So what might political instability, resignations, handovers of power and even general elections look like should they play out.
To some extent the world is growing more comfortable with Covid. Sure, Omicron presents its own challenges not least by being (one of) the newest and therefore least understood variants. Fresh threats to public health and supply chains once more should not be written off but at the same time seem contained and manageable. So we can take the question at face value. Political instability if it arose in the US is likely to still come in second to the evolving backdrop of US monetary policy. That alongside the safe haven demand for the Dollar would mean that anything but total anarchy would likely still leave the Dollar stronger into year end ‘22 from where we stand today.
The case for UK Pound stability in the face of political risk is less convincing. GBP has already shown a relative disregard for the surprise rate hike the Bank of England delivered this month. Monetary policy adjustment is less significant a factor than it is for the US Dollar largely because of the size of the US balance sheet and the scope for tightening in an outperforming economy. Political risk in the UK could therefore bring downside momentum to a market already wary of GBP. Tabloids have not yet forgotten no.10’s wine and cheese and pressure remains on the UK government.
Discussion and Analysis by Charles Porter
Click Here to Subscribe to the SGM-FX Newsletter
Related Insights
Daily Brief – Deals, deals and nearly deals
Charles Porter
Thu 24 Jul 2025
Deals, deals and nearly deals Risk assets have received a boost as trade deals cross or approach the finish line ahead of next week’s August 1st deadline. First in yesterday’s session was the announcement of a deal between Japan and the US. This deal had proved elusive for a while and news of its completion […]
Daily Brief – A deal on trade?
Charles Porter
Tue 29 Jul 2025
A deal on trade? On Sunday, a deal was agreed between the EU and US on trade. This has been presented as both sides seeking to avoid the uncertainty of the tariff deadline approaching this Friday. However, a deal in the context of the EU is never quite so simple. An audience with Ursula von […]
Daily Brief – Change of plan
Charles Porter
Tue 22 Jul 2025
Change of plan The ECB’s decision to adjust policy in June hadn’t been a consensus view within the market. The probability of a rate cut increased into the decision, but many had expected the Bank to keep rates on hold, pausing to take stock of policy adjustment to date. The decision last month to make […]
