The British pound has faulted today, giving up its gains after comments from US President Donald Trump left investors fleeing the US dollar.
At 5.28pm( GMT) the British currency was trading at $1.2524 against its US counterpart, down from $1.2538 in yesterday’s trading.
In an interview with the Wall st journal, President Trump noted that the US economy could suffer if the dollar continues to strengthen and blamed the problem on his planned policies such as personal and corporate tax cuts as well as major spending on infrastructure.
Mr. Trump also noted that he would refrain from calling China a currency manipulator which is a 360-degree turnaround from just a few weeks ago
“I think our dollar is getting too strong, and partially that’s my fault because people have confidence in me. But that’s hurting, that will hurt ultimately.” The US president said.
He also noted that although there are some positives of a strong greenback, in the end it becomes very uncompetitive on the world stage when it comes to exporting,
“There’s some very good things about a strong dollar, but usually speaking the best thing about it is that it sounds good . It’s very, very hard to compete when you have a strong dollar and other countries are devaluing their currency.” He added.
Some analysts say however that the pullback in the US dollar is temporary and it is only a matter of time before it bounces back against the major currencies such as the pound as the market digests Trump’s words,
"Donald Trump is the president of the U.S. so I don't blame market participants for taking him seriously, but Trump is very mercurial, very unpredictable. He's got a long track record of completely reversing himself." said Jim Rickards, editor of Strategic Intelligence and the author of "Currency Wars.
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