The aftermath of the US presidential election has cast a shadow on the economy, along with controversy. But how will America’s new president affect the global economy? The victory of Republican Donald Trump surprised the currency markets, with the plunge of the U.S dollar against other currencies, being a highlight. Despite the election results, the euro is also dealing with it’s own problem - uncertainty over upcoming elections in Eurozone countries. Alongside the euro, sterling grappling with the departure from the European Union. The pound rose 1.2 per cent against the dollar at 1.2529 and the euro was up 2.1 per cent at 1.1259.
Other than the fact the pound is rebounding from the referendum, Trump’s victory helps U.K economy. The republican has said the ‘UK will be at the front of queue for a new trade deal’. This would be be beneficial to Theresa May and the negotiations of ‘Brexit’. If she is able to show that she can do business with Trump, it will strengthen her negotiation powers with the other 27 members of the EU. However there are implications for Europe that may affect them economically and financially; the eurozone greatly reliant on exports as a source of growth. The exports could be affected by a more restrictive US trade network and also the volatility of the dollar.
Mexico is probably the most economically affected countries, with Trump's hatred towards America’s notorious neighbour. His first aim is to renegotiate the terms of the North American Free Trade Agreement. If he is not able to do this, he will pull out the deal altogether. On top of this he threatened to put a tax on some Mexican goods. Mexican workforce would be under pressure due to the retreat of many illegal immigrants in the US. Trade between US and Mexico would be very weaken, which may cause consumers in both countries see an increase in price of some goods.
We know for sure that ironically the future of the British economy is uncertain. Despite the Pound somewhat rebounding from its heavy fall since the flash crash, it is no longer regarded as the "safe haven" it was. Forecasts are bleak but in the long run the Pound is to recover back to the $1.60 it used to be at. Trump will no doubt help accelerate the recovery, but only time will tell what will happen.