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GBP/USD spot rate at time of publication: 1.2962Bank transfer rate (indicative guide): 1.2570-1.2660FX specialist providers (indicative guide): 1.2730-1.2800More information on FX specialist rates hereThe Dollar has stabilised back to levels close to where it was on election day, suggesting markets taking the outcome in their stride and might not be overly concerned with whether Donald Trump or Joe Biden win.

"We were so ready for chaos, that the chaos was taken off the table by our readiness for that chaos. Now we have what could be a contested result and the market is

perfectly calm," says Brent Donnelly, a spot foreign exchange trader with HSBC in New York.

Donnelly has produced the following graphic to confirm markets are actually relatively unfazed by the prospect of either Biden or Trump taking the White House:

He explains this relative sanguine approach has more to do with the importance of the Senate race than that for the Presidency.

"While I understand that the election is not over, with the Blue Wave off the table, the final tally should be kind of irrelevant to G10 FX. The only thing that mattered for the USD was the Senate. The President is making the usual noises about the rigged election but it seems like people and markets have become so used to the noise that it barely registers at this point," says Donnelly.

Were the Democrats to have take the Senate, the prospect of a sizeable stimulus would have increased significantly, even with Trump in the White House. This is largely a result of the market understanding fiscal 'hawks' in the Republican Senate as being the major blockage to generous stimulus.

At the time of publication the Republicans are just 3 seats shy of a majority in the Senate:

Image courtesy of Google.com, Associated Press

"The Republicans have retained enough support in the Senate to still have a lot of sway in shaping a second package, regardless of who ends up in the White House. That may see House Democrats realise that there isn’t much to be gained by stalling until after Inauguration Day in January, so there are reasonable odds that they, and the White House, will move in the direction of a smaller, but politically feasible bill, rather than sticking to the $2 tn+ bill already passed in the House," says Avery Shenfeld, an analyst at CIBC Capital Markets.

Financial and foreign exchange market volatility has risen considerably over the course of the past 24 hours and could remain elevated for many hours yet after U.S. President Donald prematurely called himself the winner of the presidential election and signalled the potential for the election to enter a protracted legal battle.

The 'safe haven' U.S. Dollar was bought heavily in mid-week trade after Trump told supporters, "we will win this, as far as I am concerned we already have"; he added he plans to go to the U.S. Supreme Court and wants all the voting to stop. "Frankly, we did win this election," he said.

The rally in the Dollar follows on from a slump seen on Tuesday, when markets positioned for a potential 'blue wave' outcome.

The declaration lby Trump ooks unfounded given the simple observation counting continues, but it does signal the potential for the race to descend into a messy, protracted legal fight.

"An unclear election result jolts already high post-pandemic uncertainty amid a worsening global growth outlook, raising potential volatility and risk aversion. While the length and seriousness of the delay remain unknown, the outcome most feared by markets skews towards risk reduction," says Marvin Barth, a foreign exchange strategist at Barclays.

At the time of publication, President Donald Trump looks to be favoured against Democrat contender Joe Biden in some betting markets which makes for a significant shift in fortunes, having defied polls by pulling off an upset and winning the all-important state of Florida.

"Donald Trump appears to have staged a remarkable comeback, as polling across the U.S. suggests he has had a good night. The market reaction has so far avoided the volatility of 2016, at least on the downside, with yet more gains for stock futures. This impressive recovery by the party viewed as pro-business has been taken in a positive vein by markets," says Chris Beauchamp, Chief Market Analyst at IG.

Meanwhile, reports suggest that some key swing states - the very states that will decide the outcome - are unlikely to report today.

This could introduce some uncertainty into foreign exchange markets and ultimately support the U.S. Dollar which alongside the Yen and Franc tends to benefit from times of heightened investor nerves.

The Pound-to-Dollar exchange rate has reversed the previous day's surge that came on the back of a complacent market that looked to front-run a clear sweep of the White House and Senate by the Democrats and is now down 1.0% on the day at 1.2984, the Euro-to-Dollar exchange rate is meanwhile down a percent at 1.1639.

A look at the Dollar's performance on the day confirms it to be the best performer in the G10 space:

"USD strengthened across the board as President Trump is performing better in the US election than the national polls suggested," says Carol Kong, a foreign exchange strategist at CBA.

It is reported that Michigan and Pennsylvania - two key states likely to determine the outcome of the race - face severe reporting delays, with no official result likely this morning.

"We caution that many votes in the swings states are yet to be counted. Few of the swings states have been called for either candidate by the major news organisations. So the eventual winner remains uncertain in our view. We expect the US election will continue to be the dominant driver of currencies in the near term," says Kong.

Markets had apparently been looking for a clean sweep by Biden and the Democrats, but this now looks unlikely. "It may take a little longer," Biden said in a statement, as crucial swing states he hoped to flip like Arizona, Georgia, North Carolina and Wisconsin, remaining too close to call at the time of publication.

With investors facing a potential period of uncertainty, 'safe haven' currencies are likely to outperform; "the USD is benefiting for now, but a long delay should boost alternative safe havens like the yen and CHF, which may benefit from diversification," says Barth.

Losers are likely to include emerging market currencies that tend to perform during times of elevated investor confidence, such as the Rand and Turkish Lira.

"The weakest credits among the high beta currencies are at most risk, particularly the TRY and ZAR," says Barth.

The 'commodity dollars' such as the Canadian, New Zealand and Australian Dollars are also highly levereged to sentiment and would therefore also likely underperform should tensions over the outcome of the vote rise.

"Within the G10 this implies underperformance of the antipodeans and CAD," says Barth.