Since Donald Trump's election victory and subsequent inauguration as President, global financial markets have been characterised by volatility and anticipation as new policies have reshaped the economic landscape. Trump's stance on protectionist trade policies, tax cuts, and aggressive deregulation has fuelled market reactions across the board. The emphasis on America-first policies has already begun to impact international trade and foreign exchange markets, with fluctuations affecting multiple currencies against the British Pound (GBP). In this report, we will analyse these impacts and discuss strategies for businesses to navigate this dynamic environment.

Impact of Trump's Policies on GBP against Key Currency Pairs

1. GBP/USD

The Dollar surged initially due to investor optimism regarding Trump’s pro-business stance, leading to stronger-than-expected performance for the USD. However, market responses to policy announcements and geopolitical tensions have introduced instability. For GBP/USD, this has translated into periodic depreciation for GBP, with movements tied to shifts in US fiscal policy announcements, including recent corporate tax changes. Businesses trading in USD should be prepared for potential GBP declines as Trump pursues further policies focused on reducing trade deficits.

2. GBP/EUR

With European economies facing direct repercussions from new US trade policies, the Euro has also been volatile. Trump's proposed tariffs on EU exports, particularly in sectors like automotive and agriculture, have affected GBP/EUR movements. Additionally, UK-EU trade negotiations post-Brexit add another layer of complexity, making this a particularly volatile pair.

3. GBP/CHF

As a traditionally safe haven, the Swiss Franc has reacted to global uncertainties heightened by US policies. During periods of escalated trade tensions or geopolitical conflicts, the Franc tends to appreciate as investors seek stability, which could weaken the GBP/CHF pair. This effect may be exacerbated as we move towards the Christmas period, where investor caution typically increases.

4. GBP/CAD

With the US as Canada’s primary trading partner, Trump’s trade tariffs on raw materials and energy imports have influenced CAD’s strength. Oil price movements, tied to Trump’s energy policies, affect the Canadian Dollar’s performance against the Pound, particularly as Canada seeks to protect its energy exports. Any further protectionist measures could weigh heavily on this pair.

5. GBP/JPY

As another safe-haven currency, the Japanese Yen tends to strengthen amid economic uncertainty. Trump's approach to North Korea and China, coupled with Japan’s exposure to US policy changes, has created significant fluctuations in the GBP/JPY rate. With potential interest rate adjustments in the US on the horizon, we may see further impact on this pair as traders react to shifting US-Japan relations.

Economic Data Releases and Market Indicators

In the months ahead, several critical data releases will be essential in understanding the trajectory of currency pairs. These include US non-farm payroll figures, inflation rates, and GDP reports, all of which can affect GBP-related currency pairs. Brexit-related data in the UK and ongoing European economic indicators, like German industrial output, will also be instrumental in predicting future movements. Market participants should remain vigilant, especially during high-impact data releases, as these can trigger significant volatility.

The Importance of Hedging for Businesses in a Volatile Market

With the uncertainty surrounding Trump’s policies and the volatility heading into the Christmas season, businesses are increasingly exposed to currency risks. Currency hedging is a vital tool for managing this exposure. By establishing a hedging facility, companies can safeguard against potential losses resulting from adverse currency movements, enabling them to plan their finances with greater certainty. For companies with cross-border transactions, this strategy is essential to minimise risk and protect profit margins, especially as significant policy shifts may influence currency performance unpredictably in the lead-up to year-end.

How Margin Expert Can Help Your Business

Margin Expert offers a range of services to help businesses navigate these turbulent times with tailored currency solutions. From offering competitive foreign exchange rates to optimising cash flow through improved credit terms, Margin Expert is equipped to support your business’s financial goals. With a free, no-obligation quote, you can explore how our services can lead to cost savings and strategic advantages. Visit [www.marginexpert.com](https://www.marginexpert.com) today to learn more about our solutions and discover how we can help your business adapt to an evolving market landscape.

Callum Lee, CEO