Trumps in town, traders beware

President Trump arrives in the UK today on his first UK state visit.

The unconventional leader has been ruffling feathers, and has not been afraid to stand up for American interests.

Theresa May will be on a charm offensive as the prime minister will be seeking a positive trading relationship with the US, especially with the UKs exit from the European Union on the horizon. Its likely that both leaders will be keen to lay the groundwork for a future free-trade agreement.

President Trump has been picking trade spats with some of the USs closest allies, and whos to say he wont do something similar with the UK once it has left the EU. If Washington DC can take aim at China, the second-largest economy in the world, then it could also decide to take a similar course of action with the UK.

Timing is everything. The US president is turning up the heat on China as he knows full well their economy has been cooling for a number of years. Traders believe that the Chinese economy will come off worse than the US if the two sides enter into a trade war. Since the UK is still in the EU, Trump is likely to keep this visit a friendly one, but that could all change post-Brexit.

The president isnt shy about trying to get what he wants – his recommendation to Saudi Arabia about increasing output in order to ease oil prices is a recent example. President Trump might use his UK visit to discuss anything from international trade to defence. There will be a lot of media coverage on the back of this and if we do see additional volatility in the markets, it is likely to be in the British pound and, in turn, the FTSE 100.

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