Fresh Lows for Pound to Dollar Rate As Trump Eyes Trade 'Hawk' Appointments

File image of Marco Rubio. Image: Gage Skidmore.

The Dollar powers onward, helped by Donald Trump's appointments of trade 'hawks' to his top team that reinforces his committment to significant import tariffs.

The Pound to Dollar exchange rate fell to 1.28, its lowest level since August, as the 'Trump trade' found fresh wings, helped by the appointment of Marco Rubio as Secretary of State.

"Trump is set to pick two men with track records of harshly criticising China for key posts in his new administration, adding to investor concerns that relations between the two countries will deteriorate further in the coming years," says Lee Hardman, Senior Currency Analyst at MUFG Bank.

Rubio's appointment makes him the first sitting Secretary of State to have been sanctioned by China.

Rubio called on the Treasury Department in 2019 to launch a national security review of popular Chinese social media app TikTok’s acquisition of Musical.ly. This year he called on the Biden administration to block all sales to Huawei after it released a new laptop powered by an Intel AI processor chip.

"Florida Representative Mike Waltz, who has called China a "greater threat" to the U.S. than any other nation, is reportedly in line to be national security adviser," says Hardman.

Waltz is also on the Republican's China taskforce and is considered hawkish, advocating for a more aggressive foreign policy when it comes to China.

GBP/USD investment bank consensus forecasts: The end-2024 and 2025 guide from Corpay has been released. It shows a sizeable uplift was made to the consensus forecasts for GBP/USD. Please request a copy here.

Dollar exchange rates have risen following Donald Trump's victory in the presidential election, while his hand is strengthened by his Republican party claiming the Senate and House of Representatives.

"In FX, investors appear to be accelerating the 'Trump trade', with the USD strengthening further across the board, as reflected in the US dollar index (DXY) rising back above 105.50," says Roberto Mialich, FX Strategist at UniCredit Bank.

Trump's agenda includes significant import tariff increases that are tipped to hit the economies of major exporters such as China and the European Union.

"Market attention is now quickly turning to who Donald Trump will pick to hold key positions in his incoming government," says Hardman.

The appointments signal that Trump is putting in place names that have a 'hawkish' stance on Trade, which could mean he will fulfil his agenda.

There was some speculation that, given Trump's strong performance, he could afford to reconsider his trade stance, particularly given the inflationary impact of tariffs.

Elise Stefanik is Trump's nomination as U.S. ambassador to the United Nations, and Hardman explains she has also been outspoken on China, citing national security and economic threats posed by the “Chinese Communist government” as one of her priorities when serving as congresswoman for New York.