As Donald Trump enters the White House once again, Britons are warned there may be economic consequences around the world.
There could be impacts on people’s savings, mortgages and pensions which we have detailed below.
Donald Trump’s return to the White House has sent immediate ripples through UK financial markets, with the pound sterling falling against the dollar in early trading.
The Pound dropped from $1.30 to $1.285 following Trump’s victory over Democratic candidate Kamala Harris in the US presidential election. This is its lowest level since Keir Starmer’s election win.
Trump secured his win after claiming crucial swing states including North Carolina, Georgia and Pennsylvania, accumulating 279 electoral college votes to Harris’s 219.
Experts warn that Trump’s presidency could lead to prolonged higher interest rates and mortgage costs for British homeowners.
Lindsay James, investment strategist at Quilter Investors said: “Many of his measures will be inflationary and likely to lead to a rise in bond yields, putting pressure on the Federal Reserve in its quest to bring interest rates down.”
She explained his immigration policies and planned import tariffs are expected to fuel inflation in the US.
Paul Dales of Capital Economics suggests this could impact UK monetary policy. He said: “A more inflationary global environment may mean the Bank of England cuts interest rates by less than otherwise.”
Despite these concerns, the Bank of England is still expected to reduce rates from five per cent to 4.75 per cent this Thursday.
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For UK pension holders and ISA investors with US exposure, Trump’s victory could bring short-term market opportunities.
Justin Onuekwusi, CIO at St James’s Place said: “Given Trump’s focus on international negotiations, sectors tied to international trade – particularly tech and consumer goods – may experience more volatility.”
However, he notes that “emphasis on deregulation and corporate tax cuts could give short-term boosts to industries like traditional energy, financials, and defence”.
Many workplace pensions have significant US market exposure, with 40 per cent or more of members’ money invested in US stocks.
Investment experts advise against making hasty decisions based on the election outcome.
Brian Byrnes, head of personal finance at Moneybox said: “Over the medium to long term, which should be the time horizon for all investors, US markets have grown, regardless of who is sitting in the White House.”
He adds that investors should “be ready for noise and volatility over the coming weeks but feel confident in their ability to invest to support them in hitting their financial goals in the years to come.”
This long-term perspective is particularly relevant for pension holders, who typically invest over decades rather than months.
