Trump is an inflationary President and if the Fed drops rates too aggressively, markets might be concerned that financial conditions are going to ease, contributing to an increase in price pressure.
We’ve already seen some commodity prices move on the news that Trump will be the next President but another risk is that staple commodities, such as wheat, are bought and sold in USD, so if the dollar strengthens and the pound weakens, that can increase the price of a loaf of bread in the supermarket.
The same is true of coffee, sugar, and other commodities that people may not realise are impacted by currency market movements.
Trump has the executive power to impose tariffs on countries from his first day in office, so from January, these tariffs could be in place and the cost passed on to consumers.
The dollar is a hard currency and the British pound is less preferred so we could see investment flow away from the UK into the US market, which would hurt UK firms and potentially UK jobs.
