The International Monetary Fund have increase their growth forecasts for the US, suggesting that the plans Donald Trump is set to bring will improve the economy. High spending and tax cuts are likely to fuel growth according to the report.
The report did raise some concerned however that suggested the US entering into a trade war with China could have potential issues. The USD would likely appreciate and interest rates would have to increase quickly to control inflation. The changing economic landscape may also have an effect on emerging economies and could cause nations to have to act more in self-interest.
There will be a much better understanding of how Trumpenomics is set to change the economy over the next few months. The President elect will be inaugurated on Friday this week and is set to start making major decisions from then onwards. The IMF will complete a total economic outlook in April and this is likely to show quite what the effect Trump has had.
Theresa May rallies Sterling
UK Prime Minister May today set out the 12 point plan for the UK’s Brexit negotiations. The plan indicated what the PM wants to gain from the deal and how she plans to go about getting it. The key points from the speech were that the UK will leave the single market and that no deal is better than a bad deal. This stance could certainly start to get some blood boiling over the channel as May is keen to regain control of the UK’s borders without compromise.
Sterling responded emphatically with the biggest single day increase against the USD since 2008. No doubt tomorrow will be another day and I would expect to see a response from key figures in the EU, this could certainly cause some of Sterling’s gains to be pegged back.