The United Kingdom has become the first country to agree a trade deal with the United States of America after President Trump unveiled sweeping global tariffs, some of which have since been scaled back.
Regardless, these tariffs have caused global economic uncertainty and created chaos in the markets.
The hope from the UK is that this new deal will calm the markets and offer some respite in the form of a reduction in tariffs on steel, aluminum, and other exports.
Kate Leaman, chief market analyst at AvaTrade said, “The UK-US trade deal announced today brings welcome relief to UK markets.
“Key tariff cuts on the automotive and British steel industry should help improve profit margins for UK exporters. There is also optimism that this deal could act as a springboard to further tech partnerships between the two nations.
“The FTSE 100 and 250 have reacted positively, with gains being driven by optimism around reduced trade barriers and better earnings prospects. Midcaps in particular stand to benefit.
“Sterling has strengthened modestly – trading around 1.335 USD – supported by reduced trade uncertainty. However, the Bank of England’s decision to cut interest rates today by 0.25% has limited further gains.
“While not all of the details of the deal have been finalised, this is hopefully a meaningful step toward smoother UK-US trade and offers a positive backdrop for UK equities and the pound.”
