Trump under pressure

President-elect Donald Trump has been in the spotlight once again for the wrong reasons. Reports have emerged that Russians have had leverage over him and have tried to sway his actions.

Mr Trump is not impressed with US intelligence agencies as he believes the news should have not been leaked to the press. It was no surprise the soon to be President took to his famous twitter account to defend himself. He stated ‘Russia just said the unverified report paid for by political opponents is “A COMPLETE and TOTAL FABRICATION, UTTER, NONSENSE” very unfair’.

Looking ahead, I believe Donald Trump and his twitter account could cause volatility for the dollar. It was only last week Mr Trump warned Toyota that they would face border taxes on products made from their potential new plant in Mexico. $1.2 billion was wiped from the companies’ value and the US dollar also temporarily dropped in value. Any further outbursts could cause the US to lose value and if I had dollars to sell this would worry me.

Will Trump have an impact on interest rate decisions?

The relationship between President Donald Trump and Chairlady of the FED Janet Yellen has been rocky to say the least. The incoming President questioned the FEDs decision not to raise interest rates in the build up to the Presidential Election. The Fed would exclaim they are independent and solely focused on the economy however like last year I don’t believe the FED will raise rates for at least 6 months until they know the impact Trump is going to have on the US economy. Therefore, I don’t expect the US dollar to continue to make gains against sterling like it has done for the last 6 months.

Could the GBP/USD exchange rate break 1.20?

On Friday, the US are set to release their latest Retail Sales numbers. A sharp rise is expected which is no surprise as people piled into the shops to buy their gifts for the Christmas Festivities. If the numbers impress and no further negative stories develop about Donald Trump, there is a great chance GBP/USD could fall below 1.20. For US dollar sellers, short term, this would put you into a fantastic position and I would personally cash in on the profits made over the last 12 months.

For more information on how future data releases could affect your currency requirement, call our trading floor on 01494 725 353 or email me here.

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