Although this result means that Congress is now split down party lines, meaning political gridlock is likely, currency traders did not estimate this being a threat to the US dollar given that Donald Trump has already passed his most contentious pieces of fiscal policy in the form of tax cuts and increased spending.
Of more interest to markets is the Federal Reserve’s Monetary Policy Statement and interest rate decision, which will be reported this evening.
With a steady path of interest rate hikes already in the pipeline, no fresh increases are forecast for today although investors will be listening closely to the accompanying statements for signs that the Fed is becoming more hawkish in the face of what some economists are calling an ‘overheating’ economy.
US economic data continues to surprise to the upside, and with the unemployment rate at an almost 50-year low of 3.7 per cent, payrolls booming and wages rising fast, many analysts consider the Fed is about to start acting in a more hawkish manner to damp down the economy – something that would inevitably draw the ire of President Trump.
Over on this side of the Atlantic it’s a quiet data day for pound traders, with very few fresh ecostats to drive movement in the GBP/USD pairing.
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This will all change tomorrow when the UK’s latest GDP figures are set for release, along with plenty of other data.
Relating to the third quarter, analysts expect to see a robust uptick in UK economic activity over the quarter, with GDP growth rising from 0.4 per cent to 0.6 per cent.
While such a result may confound those who had predicted slower growth due to the uncertainty surrounding Brexit, such a forecast-matching result would likely give the pound a shot in the arm ahead of the weekend.
It’s not just GDP figures being released tomorrow however – a whole slew of UK trade and industrial production figures will coming out at 9:30 in the morning, giving GBP/USD traders something to chew on for the remainder of the weekly trading session.