Escalating Trade War with China Putting Pressure on the USD

The USD has seen its value weaken against Sterling of late, with the markets seemingly becoming concerned about the escalating trade war between the US & China.

President Donald Trump has been steadfast in his commitment to heavily levee Chinese exports to the US, with multiple tariffs being introduced on a variety of Chinese products. China has retaliated with tariffs of their own and whilst it was the Chinese economy that initially seemed to be the worst affected by this escalating trade stand-off, it now seems as though investors are becoming concerned about the potential negative impact it may have on the US economy over the coming months.

Reports have indicated that China still has room for further sanctions, which could mean the US Dollar takes another hit if these were to be implemented over the coming days or weeks. Whilst both sides have made noises about trying to find a resolution, they are yet to find any common ground and this in itself could put further pressure on the greenback.

The Pound itself has benefitted from a spike in confidence regarding a potential Brexit deal. Whilst no agreement is yet in place, it does seem as though both the UK and the EU are prepared to soften their stance on key issues, which may help to drive negotiations ahead of Novembers EU summit. This is the point where both sides hope to have an agreement in principal, ahead of next March’s deadline.

When all of this is broken down, it is clear that there are concerns for both the UK and US economies and as such both buyers and sellers may not be prepared to risk any further downturn, with Sterling’s recent gains bringing some relief to those clients with an upcoming GBP/USD currency exchange to execute.

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