GBP/USD Exchange Rate Narrows, is Trump’s Teflon Coating Beginning to rub off?
The US Dollar (USD) is in focus again this morning as pressure is heaped on Donald Trump as two of his former associates face convictions that could have direct implications for the US President.
At the time of writing the Pound US Dollar (GBP/USD) exchange rate is treading water this morning as markets mull over the current drama surrounding the US presidency.
US Dollar (USD) in Focus, Will Trump Survive Cohen’s Guilty Plea?
The US Dollar (USD) has enjoyed considerable gains in the past four months, rocketing higher on the back an impressive US economic performance, safe-haven demand and Federal Reserve rate expectations.
However recent courtroom drama now throws some doubts on the US Dollar’s continued strength as Trump’s former Lawyer Michael Cohen pleads guilty to violating campaign finance laws through the payment of ‘hush money’ during the election campaign to silence two of Trump’s alleged mistresses.
It was Cohen’s direct implication of Trump in the paying of the ‘hush money’ that is particularly important to markets as it potentially leaves the President in legal limbo.
While observers do not expect the Cohen plea to unseat Trump’s presidency, it certainly dents his chances of a second term and could have implications for the mid-terms in November, with an uncertain outlook from USD investors potentially dethroning the US Dollar in the months to come.
Joshua Mahony, market analyst at IG, said:
‘Michael Cohen’s implication of Donald Trump in criminal activity may not put the president behind bars, but it has certainly riled markets.
‘While Trump is one of the most divisive presidents in history, markets have certainly taken to his economic expansionary policies and any threat to his second term will likely hit markets.’
GBP/USD Exchange Rate Forecast: FOMC Minutes to Revive USD?
Looking ahead, the Pound US Dollar (GBP/USD) exchange rate could come under pressure later this evening as the Federal Reserve publishes the minutes from its August policy meeting.
Economists are expecting the minutes to strike a broadly hawkish tone, with an upbeat assessment of the US economy potentially bolstering market rate expectations and lending strength to the US Dollar.
Meanwhile the Pound could face some pressure on Thursday, with the CBI’s latest retail survey expected to reveal retail activity slowed again in August.
Comments are closed.