Obama to scrutinise Trump movement
Pound to US Dollar exchange rates were up 1.5 cent as President Obama confirmed he would be prepared to stand up and speak out against Trump should certain values be questioned. Normally a leaving President resides somewhere quite enjoying the break from the hectic life, however Obama would be prepared to question the President Elect once he is in power.
Donald Trump over the weekend begun interviewing some of the key remaining positions in his cabinet. Trump at his own golf estate in New Jersey has started to interview some of the finance world’s most successful minds, with billionaires and hedge fund managers in the running for the jobs. There is a thought that they’re running for Treasury Secretary which often is left to a chief academic economist so to implement someone with past success could be very shrewd.
It’s safe to say that over the next several weeks there will be a lot more discussions with different candidates and a picture may start to be formed. Trump didn’t give much away in the run-up to the election as to who he would bring into his administration, but it looks like business brains are coming in over career politicians or legislators.
In my opinion for as long as there are no overly outrageous choices who have a contentious background then there could be quite a lot of confidence in the leadership. Bringing in people fresh to politics could provide the out the box thinking that Trump could be looking for. I therefore believe that the US Dollar could have some continued strength in the near future. Especially as we move towards an interest rate hike in December.
Will the FED hike rates in December
It’s widely anticipated that the FED will act to hike rates in the new year, with economic data in support of a move towards a base rate of 0.75%. Much of the current strength in the US Dollar is a direct result of investors pricing in ahead of the December briefing. It does remain questionable as to whether the FED will raise its interest rate weeks prior to Trump taking power. Whilst the FED act independently of political events they may decide to hold off until its understood what implications a Trump presidency is having on the US economy.
Is now a good time to buy US Dollars?
It’s difficult to envisage Pound strength against the US Dollar in the weeks ahead, unless serious movements occur around Brexit, or US economic data takes a sudden turn for the worse following the election result, it’s more likely that the US Dollar will maintain its position against Sterling. With the FED widely expected to raise interest rates in December, a move to 0.75% would likely create further strength for the Dollar, pushing Pound to US Dollar exchange rates into less favourable territory.
Further, with Philip Hammond – the UK’s chancellor expected to release his Autumn statement on Wednesday, markets may react negatively to the recent news that the UK faces a £100bn financial hole as a direct result of Brexit. If you are planning on buying US Dollars in the near term, tomorrow may be a safe bet.