Home » Currency Note » Currency Note » Donald Trump comments weaken pound

On Monday evening, Donald Trump spoke to reporters outside the White House and suggested that the UK might not be able to trade with the US. When asked about Theresa May’s Brexit deal, the former reality television star said that it sounded like a ‘great deal for the EU’ and that he would have to look at whether or not the UK is allowed to trade with America. The UK government was understandably infuriated by the comments and moved quickly to say that Trump is incorrect.

However, the comments certainly weakened May’s hand in face of stiff opposition from both sides of the House and City traders clearly felt that Trump’s intervention was significant, as sterling opened weaker against the dollar and continued moving south throughout the day. The pound lost some ground against the euro too, although these moves were more sedate.

Trump’s tongue was off again, as he threatened to impose fresh tariffs on goods from China. He said that it was ‘highly unlikely’ that he would accept an offer from the Chinese president Xi Jinping to avert new levies that are scheduled to come into force next January. Speaking to the Wall Street Journal, Trump said that he would probably increase existing tariffs on $200 billion of Chinese imports in January, from 10% to 25%.

Apple’s shares were hit following the comments, as the new tariffs would affect iPhones made in China. Earlier this year, Apple was celebrating becoming the first US company to be worth more than one trillion dollars, but it has since lost a large chunk of that. The Dutch financial services group, Rabobank, said that the global economy could suffer over the next decade if the trade war escalates; it estimates that a total of 0.7% could be wiped of growth by 2030 unless the two sides reach an agreement.

Today’s headline release is the second estimate of the US GDP growth rate for the third quarter of 2018. Last quarter, growth surged to an impressive 4.2% but this time around it is expected to be more modest at 3.5%. Still, that is far better than the UK and EU GDP at the moment. We will also see October’s new home sales in America.

With so much going on at the moment – and no signs of anything abating – do make sure your budget is protected. A forward contract fixed the same exchange rate for up to a year, no matter what the markets do. Speak to your Personal Trader on 020 7898 0541 to find out more.

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