Americans are heading to the polls to vote on members of the House of Representatives and the Senate, which together make up the US Congress.
At present, both houses of Congress are controlled by Donald Trump’s Republican Party, but Democrats think they are in with a chance of winning a majority of seats in the House of Representatives.
If they were to do so they may be able to block President Trump’s economic plans, meaning the result of this election is likely to have a serious effect not just on the outlook of the US economy but also the value of the US dollar.
Currently, opinion polls put the Democrats ahead, indicating that political deadlock may be on the cards, but opinion polls have been proved wrong in the past few years so currency traders are awaiting some solid results before making any moves.
Meanwhile, on this side of the pond, the pound has remained buoyant on the latest surge of optimism surrounding a Brexit deal.
Reports circulating in the media that the EU was preparing to endorse a compromise on the Irish border situation have helped Sterling sentiment.
The pound has now climbed by 3 per cent against the US dollar since the end of October, despite the past week’s insipid UK data in which it was revealed the services and manufacturing sectors are slowing.
This buoyancy could be tested later on today when Theresa May holds a cabinet meeting during which she is expected to update ministers on the latest Brexit developments and brief them on the current state of negotiations.
Looking ahead, tomorrow will see the release of the latest Halifax UK house prices report, with an expected uptick in the cost of buying a home in October likely to give Sterling a small boost.
More influential, however, to the GBP/USD exchange rate tomorrow once the dust from the midterm results settles, will be the latest consumer credit figures from the US, with investors looking for signs that the American consumer is continuing to prop up the economy with spending.