Financial markets are experiencing turbulence as we end 2018 with a variety of uncertain situations creating uncertainty. Stock markets have been choppy as investors try to gauge and price in the potential outcomes from the US Government shutdown. Donald Trump and the Democrats have forced a US Government shutdown with the disagreement over the building of a wall between the US and Mexico.
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Trade Wars are also a major concern for the US with Trump’s attitude on global trade weighing on investors sentiments towards the US economy.
Investors are now concerned about 2019 and whether or not these activities will lead to further instability and the possibility of the US economy slowing down.
The weaker US economy will be a headache for investors as the market looks towards the number of possible interest rate hikes in 2019. The US Federal Reserve is predicted to raise rates 2, possibly 3 times in the year ahead. The varying outlook on the US government shutdown and the Trade Wars is weighing the US dollar down and looks set to be the key points as we enter 2019.
Pound to US dollar rates might be higher, were it not for the concerns over Brexit holding back the pound. The uncertainty of the UK’s political and economic future is unlikely to be resolved anytime soon and unless the US dollar weakens dramatically, GBPUSD levels might find they remain moored under the 1.30 barrier.
Markets have been keeping nervous eyes on the potential negative effects on the economy from Donald Trump’s Presidency, and the next year looks like it will contain more of these elements. The US dollar looks set to weaken on the unravelling of the ‘Trump trade’, but for now against a weaker pound should continue to hold most of the ground.
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