US Shutdown continues, to the detriment of the US dollar against the pound

GBP to US Dollar rate improves as Fed Reserve Bank adopts dovish stance

The pound has been making some positive moves vs the US dollar since the turn of the year as the US shutdown continues in to its 19th day.

So far President Donald Trump has asked for $5.7bn in order to build his wall between the US and Mexico, which was part of his election pledge but this has been denied by the Democrats who rule over the House of Representatives, and they will not budge on their decision.

In a meeting yesterday Trump stormed out after a very short period of time citing the meeting as a ‘total waste of time’.

As the stalemate appears not be ending anytime soon this will keep the shutdown ongoing, which is affecting 25% of Government staff and approximately 800,000 federal employees.

With the first pay day due on Friday if the shutdown continues then these people will not get paid and this will cause problems for the economy and therefore potential weakness for the US dollar.

Could the Brexit plans cause the pound to fall against the US dollar?

Although the pound has made some positive movements against the US dollar since December, the real problem could come next week when the rescheduled vote is due to take place.

Theresa May has set the date of January 15th for the next vote in Parliament and at the moment she has come under pressure in the House of Commons.

The impression from the European Union appears to be that they will not budge on their offering and if next week’s deal is the same as that being proposed in December, I cannot see this getting the support needed to get it through and this is likely to cause problems for the pound.

Economic data to cause movement on Dollar rates

Tomorrow morning the UK will publish a number of different economic data releases including Industrial and Manufacturing data as well as Trade Balance. With the British economy under a lot of pressure in recent times caused by the uncertainty of Brexit, if the data is lower than expected this could see the pound fall against the dollar towards the end of the week.

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