US Dollar weakness after Trump Inauguration

The Pound has started to make some inroads against the US Dollar following President Trump’s inauguration and the very patriotic speech that he gave. There are serious concerns that the current US stance towards protectionism and the possibility of potential trade wars could signal slower growth in the US. This could be negative for the Dollar and could well be the turning point considering how strong the US Dollar has been. Donald Trump only yesterday abandoned the Trans-Pacific Partnership (TPP) which was Obama’s signature trade deal linking the US to East Asia.

Donald Trump has also signalled he would like to see a weaker Dollar. The combination though of a highly likely UK US trade deal, a more protectionist US economy in general and a new President looking to make substantial change could see better times as far as GBP/USD is concerned. Once Brexit is well underway there is considerable scope in my view for the pound to climb higher against the US Dollar.

Theresa May to meet Donald Trump

It has been confirmed that UK Prime Minister Theresa May will meet with US President Trump this Friday where it is expected a US-UK trade deal we be discussed. Talks are expected to revolve around cutting or removing tariffs between the two nations with the intention of announcing a trade deal within weeks after Brexit. It is believed that Trump will be keen to strike a deal to show that he is different to President Obama and any noises like this are likely to create volatility for the pound. In my view this has the potential to create some positive market movement for sterling in the medium term, although we still have a long way to go considering Brexit has not even begun yet. Theresa May will be the first foreign leader to meet the US President on Friday which also sends a positive message for the Pound.

There are a handful of minor data releases this afternoon with manufacturing and home sales numbers. Friday however looks set to be a big day on the markets with US GDP numbers for the fourth quarter and of course some good photo and tweeting opportunities after the May / Trump meeting.

With Trump heavily in the media spotlight, further US Dollar weakness may present itself if the newly appointed President continues to worry markets. Speak with our team today on 01494 725 353 or email me here if youd like to know more about how this could affect you.

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