Trump and his Post-Brexit Promise

Trump looks to Britain for an alliance, a much-needed one as the U.S goes on its trade warpath. It will come with strings attached, however…
Bob Mason
Pound Coins Dollar

The Promise

The U.S President chose a different tact on Tuesday. In stark contrast to other trading partners, who have fallen into the trade warpath, Trump promised a phenomenal post-Brexit trade deal.

Ahead of the 3-day visit, the U.S President had been quite candid over Britain’s relationship with Huawei and Brexit. Trump also held back from seizing the opportunity to discuss Iran, another U.S bone of contention.

Perhaps in the need for at least one ally, the U.S President talked of the special relationship that the U.S and UK share.

The change in approach by the U.S President is not the first, however. In face to face meetings with Russian President Vladimir Putin and China’s Premier Xi, the U.S President had also delivered particularly complementary speeches.

Last year’s Putin meeting had, in fact, outraged Congress.  This ultimately led to a swift U-Turn once the U.S President returned to the White House.

As for China and Premier Xi, the extended trade war is a perfect example of what the UK may have to look forward to in the coming months.

What Lies Ahead

The U.S President decided to throw in a trade deal as the basis for compromise. Of interest is the fact that there’s unlikely to be any discussions until after Britain leaves the EU.

One could argue that there’s little point in starting discussions until there is greater clarity on what relationship the UK will have, if any, with the EU.

For the British government, however, leaving trade talks until after Brexit could leave British negotiators on a weaker footing.

It would be particularly surprising if the U.S President went ahead with a ‘phenomenal’ trade agreement with the UK, without strings attached…

Expect the U.S to attempt to address Britain’s relationships with Huawei and Iran. That is assuming that Huawei remains on the U.S hit list come November,

The EU has already ruffled the administration’s feathers over the nuclear agreement. Britain will be expected to fall in line once they’ve lost the EU’s backing.

For the Pound

While the Dollar slide provided plenty of support to a Pound that returned to $1.27 levels, there was also upside from the prospects of a close alliance with the U.S.

It remains to be seen, however, whether the U.S President maintains his stance in the coming weeks. The rhetoric over Brexit, Huawei and Iran could well resume. With it could come less bullish comments of a trade deal with Britain.

The U.S is in need of a strategic ally. Who could be better than Britain, who has voted to break free from the EU?

The race to become British Prime Minister will remain the key driver for the Pound. Support could come, however, should the U.S President maintain his current stance…

At the time of writing, the Pound was up 0.18% to $1.27123.

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