The 45th president of the United States Donald Trump was officially inaugurated on Friday afternoon and we could be in for an unsettled and rather uncertain time ahead.
Trump pledged to ‘put America first’ in his speech and claimed that ‘we will bring back our jobs, our borders and our dreams.’ The tone of the speech was in my opinion one of protectionism as he also went on to say ‘we will follow two simple rules - buy American and hire American.’ Clearly Trump is pro-business domestically but it will be interesting to see how his economic policy will work with other countries including the UK. There have been huge rallies in many cities across the globe in protest at Trump’s appointment and there is such a large voice that this is likely to go on for quite some time which could see a problem for the Dollar as investors weigh up trump’s first few days in office.
Prime Minister Theresa May will be meeting with Trump at the White House on Friday to discuss both the importance of the NATO military alliance and arguably more importantly free trade. During Obama’s time and in the run up to the Brexit vote last summer he said that the ‘UK would join the back of the line’ when it came to trade deals but it appears as though Trump is very pro-UK and with Theresa May the first foreign leader to meet him since taking over the talks could be promising.
I think if the talks go well this could be positive for Sterling against the US Dollar as well as giving the Pound a much-needed boost. However, as the US economy went from strength to strength and was one of the very few nations to increase interest rates I think it will be quite some time before Pound to US Dollar exchange rates go in a longer term upwards direction.
With Theresa May expected to meet with President Trump next week, Pound to US Dollar exchange rates may strengthen off the back of positive trade talks. Speak to one of our dedicated brokers today on 01494 725 353 or email me here if youd like to learn more.
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