UK President Donald Trump has been back in the headlines over the last 7 days as he announced that another $300bn tariffs are set to come into play at the beginning of September on top of the 25% on $250bn tariffs that are already in play.
Trump took to his twitter account to announce the news and blamed the Chinese as they have failed to buy bulk agricultural goods from the US like they had promised. Analysts are suggesting that it’s likely the trade war is set to escalate and the tariffs could be up to 25% in the upcoming weeks.
President Donald Trump has criticised the Federal Reserve this year as he believes the high interest rates and the strong US dollar is having a detrimental impact on the economy. Even though interest rates were cut last month analysts are suggesting that further tariffs could cause stress on the global economy and the central bank may have to intervene and cut interest rates further. History tells us when a central bank cuts interest rates the currency tends to devalue, therefore the highs that we are seeing for USD/GBP could come to an end in the weeks to come.
It’s a quiet finish to the week for the US in regards to economic data. Going into next week inflation numbers are set to be released Tuesday afternoon. Inflation is forecasted to remain steady at 2.1%. This could be a deterrent to cut interest rates, however the inflation numbers could be irrelevant in the months to come if trade tariffs rise to 25%.
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