GBP USD Exchange Rate Climbs with Pound Bolstered by Trump Trade Prospects

Modified: Friday, 11 November 2016 13:35 BST - Written by Frank Davies

STORY LINK GBP USD Exchange Rate Climbs with Pound Bolstered by Trump Trade Prospects

The GBP USD exchange rate has surged to a five-week high after a surprise win for Donald Trump in the 2016 US presidential elections. His victory caused the Pound (GBP) to surge as investors speculate that Trump could create a new trade agreement with Britain after 'Brexit'.

Sterling Sentiment Upbeat as Investors Hope for UK-US Trade Deal

Market sentiment towards the Pound has risen significantly over the last few days as investors begin to speculate whether a Trump presidency will be positive for the UK, and subsequently Sterling.

One major point that traders have focused on is the prospect that Trump will help create a new trade agreement with the UK once it leaves the EU, with him previously mentioning during his campaign that Britain would be at the ‘front of the queue’ for forming a deal after 'Brexit'.

However there are some questions of how high Trump would prioritise creating a potential trade agreement with the UK. One of Trump’s many threats during his campaign was to tear up many existing trade agreements, like the North American Free Trade Agreement and the Transatlantic Trade and Investment Partnership, which he blames for the decline in the US industrial sector.

The US Dollar (USD) would likely pressure Sterling if there were strong indications that a trade deal was not possible.

Pound US Dollar (GBP USD) Exchange Rate Improves as MPs Commit to Voting against Article 50

The Pound has also been bolstered by the news that some MPs are ‘ready to vote against triggering 'Brexit’ after a High Court ruling last week that said the UK government would not be able to begin the 'Brexit' process without first voting on it in parliament.


Investors are hopeful that this will prevent the government from pursuing a ‘hard Brexit' due to a number of MP opposing the plan. As Tim Farron, leader of the Liberal Democrats, explained;

"Article 50 would proceed but only if there is a referendum on the terms of the deal and if the British people are not respected then, yes, that is a red line and we would vote against the government."

However this could be completely irrelevant next month if the Government wins its appeal to the Supreme Court and is allowed to proceed with its plan to begin 'Brexit' in March 2017.

GBP USD Exchange Rate Forecast: British CPI Due Tuesday

The GBP USD exchange rate may continue to rise further next week if the UK’s consumer price index performs as well as in September, when UK inflation surged from 0.6% to 1.0%, however as current forecasts predict a far more modest rise to 1.1% and the value of the Pound has already risen it is unlikely that an increase will be quite as dramatic.

Meanwhile the US Dollar may advance against Sterling if Tuesday’s US retail sales figures are better than expected.

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TAGS: Daily Currency Updates Dollar Pound Forecasts Pound Sterli Forecasts