I always like to start a Monday morning with some positivity. I thought that hearing Blondie, Atomic on the radio was a great start to my day but then I saw some brilliant news about the pound finally rallying against the dollar and I just knew that this week was going to be a good one.
I was a big fan of Obamacare and I think Donald Trump is a bit of a numpty if I’m honest so the fact that the failure of Trump to overhaul the US healthcare system being the cause of our pound strengthening is a double win as dar as I’m concerned. However, it’s definitely worth looking at what went wrong?
The American Healthcare Act (AHCA) was supposed to go through last Friday. In a nutshell the purpose of the bill was to overhaul the overhaul that Obamacare provided. However, on the very day that it was supposed to be passed, Trump pulled the bill completely. The feeling was that he didn’t have enough support from his own Republican party to ensure that the vote would go in his favour.
So what does this mean for the markets? Well the British pound is now at a one-month high of 1.2543 against the dollar.
“Markets have come under significant selling pressure as investors are beginning to doubt the potential pace of US economic fiscal policy reform,” says Hans Redeker at Morgan Stanley.
It was looking like good news for everyone headed abroad over the Easter breaks or for those who have any form of debt in foreign bank accounts in countries pegged to the dollar.
Unfortunately, the good news wasn’t to last long. Deutsche Bank announce that the pound could fall by another 15% against both the dollar and the euro in 2017. Currency analysts at the German bank said sterling could fall as low as $1.06 – from a current level of $1.2492 as a result of Brexit stifling growth. It also thought that the £ would edge closer to parity with the Euro.
With inflation currently 0.3% higher than forecasted the people of the UK are already starting to feel the cost of Brexit and their standards of living beginning to suffer. The gain against the dollar is likely to be a much needed relief however short-lived.
And what for the American people? like him or loathe him, last year millions of people DID vote for Donald Trump and were behind the AHCA bill. Will this new upset start to cause any repercussions within the Republican party? Or are the media jumping up and down and reporting more “fake news”?
What do you think? Has the rise of the pound against the dollar affected you? What are your predictions for 2017? Will the pound fall as low as Deutsche Bank predict? I guess only time will tell. In the meantime, are you planning on changing the way you invest or save your money? We would love to hear your thoughts and insights so please let us know in the comments below.