Trump and U.S Foreign Policy Arrives in London

The U.S President arrives in London on a State visit. That’s unlikely to stop him from dishing out some U.S foreign policy…
Bob Mason

The UK Visit

U.S President Trump shifted his focus from Japan to the UK this week, with his first state visit.

Trump is expected to waste little time in declaring his views on who should lead Britain out of the EU. There are also likely to be issues over Britain’s ongoing relationship with Huawei and some chatter on Theresa May’s successor.

With Britain scheduled to leave the EU on Halloween, the U.S President has talked of a substantial trade deal with Britain.

The promise of a favorable trade agreement is unlikely to come without strings attached, however.

Britain’s relationship with Huawei will likely be one of those strings. Trump’s assumption is that Britain would look across the Pond rather than the Channel should a no-deal Brexit take place.

An ally on the border with the EU would certainly play into the U.S President’s hands. The EU is, not only dependent upon the U.S, but also the UK on trade. A united front would certainly pressure the EU to align with Trump’s trade whims.

Trump’s view of who should represent Britain in Brexit negotiations has also been contentious.

The U.S President has stated that Brexit Party leader Farage should lead negotiations as opposed to the incoming Tory Party leader. That would be like Theresa May suggesting that Hillary Clinton should lead trade negotiations with China’s Premier Xi.

While Theresa May can take a stronger stance against the U.S President, the likes of Boris Johnson are likely to be more amenable to Trump’s desires. Theresa May’s successor would certainly need Trump’s support in the early days.

The Day Ahead

Expect plenty of chatter and we can expect Trump to take the opportunity to cover a number of global issues. Top of the list will likely also include Iran.

While the markets have become slightly more desensitized to Trump’s chatter, there’s still plenty that could jolt the markets through the day.

For the Pound

A material shift in sentiment towards the U.S economy and a more dovish outlook on FED monetary policy has provided the Pound with strong support in the early hours.

U.S Treasury yields have been on the slide and, with Trump throwing Mexico into the trade warpath, any weak stats out of the U.S would likely add to the Dollar’s troubles.

We’ve yet to hear Trump or the U.S administration attempt to calm the markets. Trump’s visit to the UK is unlikely to help. The Pound could come under pressure, however, if the British government shows an unwillingness to bow to Trump demands on Huawei.

The threat of trade tariffs on British exports to the U.S would be negative for the Pound.

In 2018, the UK enjoyed a trade surplus of £12.97bn, while the UK remains a net importer overall.

At the time of writing, the Pound was up by 0.15% to $1.26502, easing back from a morning high $1.2661.

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