The US Dollar continues to extend its gains against the Euro as markets rally over Trump’s pro-business stance. Whilst the Republican Presidential elect has made concerning comments throughout his campaign, markets are beginning to see the positive aspects of his victory.
Trump wants to bring American businesses back to US soil, imposing 35% trade tariffs on cars made in Mexico which has been heavily critisised by Ford boss Mark Fields. Furthermore, Trump’s win is likely to have no impact on the FED’s decision to raise interest rates, in fact, markets are now convinced that the FED will hike rates in its December meeting.
The impact of a Trump victory has not only had an impact on the US Dollar, the Pound which has struggled since the Brexit vote has had a significant boost as UK-US trade deals become more likely. The commodity currencies such as the New Zealand and Australian Dollar have weakened significantly as investors gear up for the FED to hike rates in the weeks ahead.
But will the trend continue? Much of this depends on whether Trump can downplay many of his campaign promises.
Is now a good time to buy US Dollars with Sterling?
With Brexit the main driver behind Pound Sterling exchange rates, and with Article 50 set for March 2017 its a real possibility that further weakness could emerge for the Pound. GBP/USD is now trading 3 cents higher since Trump became the Presidential elect which provides fresh opportunities for US Dollar buyers.
Whilst there is every possibility further GBP/USD could emerge once Trump assumes office in January, the risk surrounding Brexit negotiations will likely dominate investor decisions.