President Trump: What does the US election mean for the UK?

Chris Torney / 09 November 2016

The news that Donald Trump has beaten Hilary Clinton in this year’s US presidential election has come as a huge surprise to many people all over the world.



With most polls indicating a likely Democrat win in yesterday’s contest, the Republican nominee’s victory led initially to sharp falls in the value of the dollar as well as losses on Asian and European stock markets, with Wall Street yet to start trading.

This was thought to be due in part to Trump’s stated policy of protectionism when it comes to international trade – which could see the US impose new tariffs on certain types of imports – as well as what is expected to be a tougher stance on the American financial sector.

But as was the case in the aftermath of the EU referendum result in the UK in June, share prices appeared to bounce back reasonably quickly following the initial jitters.

The foundations of Trump’s victory

Trump's success was based on wins in battleground states such as Florida, Ohio, Wisconsin and Pennsylvania. Many of the white working-class voters that had traditionally backed the Democratic candidate appeared to have switched allegiance during the 2016 election.

The Republicans’ success marks yet another black day for the polling industry, which has recently failed to predict the result of the EU referendum as well as last year’s British general election.

What does it mean for the UK?

Currency and inflation

The most immediate impact of the Trump victory was a rise in the value of the pound against the dollar. 

Sterling has weakened considerably since the referendum, however, and today’s rise has only managed to offset a fraction of this loss. 

There is now thought to be a lower chance of the US increasing interest rates next month – and if they are kept on hold, the dollar could fall further. This would be good news for UK holidaymakers heading to America, for example, and it could also reduce the price inflation we experience in the next few months.

What will Brexit mean for UK holidaymakers?

Investments

In the hours following confirmation of Trump’s victory, markets started to rebound following initial falls. One of the problems facing investors is that the president-elect’s economic policies have largely yet to be set out. 

Many analysts say that, if you have money invested in shares, now is the time to sit tight and not make any rash selling decisions.

Are you ready to change the way you save?

Savings and interest rates

Even if the US does postpone the expected interest-rate rise next month, this is unlikely to have much effect on monetary policy in the UK. 

Here, rates are at an all-time low of 0.25% due to uncertainty caused by the Brexit process – and this is not expected to be resolved in the short term or affected to any great extent by events across the Atlantic.

Enjoyed this article?
You can find more of the same in our Money hub, offering advice, tips and news on all things financial, or you could sign up for our Money newsletter to enjoy more articles like this delivered to your email inbox each week!

The opinions expressed are those of the author and are not held by Saga unless specifically stated.

The material is for general information only and does not constitute investment, tax, legal, medical or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.