The US dollar still maintains its strength despite a Government shutdown putting strain on all those Americans affected by it. The partial shutdown has now been in place for a total of 28 days which represents the longest Government shutdown on record. The stalemate between the President and congress continues and there are no signs of Donald trump backing down stating earlier in the week that “We’re going to stay out for a long time if we have to.” The shutdown nonetheless is likely to be damaging for the US economy and could have a negative impact on economic growth.
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Trump has benefitted from an excellent run of economic data under his watch although there are signs that things are starting to slow. If Trump continues to hold out for the $5.7 billion from the democrats to fund the wall, there is a risk that growth may slow faster ahead of the 2020 elections in the US. This is the risk for Donald Trump as he would like to go into the next election with the economy booming and have that on his side. A weaker outlook could see dollar weakness especially if the markets begin to change the outlook for those future interest rate hikes.
For the moment the US economy is still performing after the latest US initial jobless claims released yesterday fell to 213,000 to a five week low down from 220,000 the week prior despite the ongoing government shutdown. The better than expected data showed the number of Americans filing for unemployment benefits has actually fallen which points to a solid labour market and one which should help support the US economy going forward. The data follows impressive non-farm pay roll numbers seen at the start of the year which saw a big number of 312,000 jobs being created at the end of 2018.
Those clients with a GBP to USD transfer should pay close attention to Brexit developments over the weekend ahead of a statement to be made by Theresa May on Monday.
The Prime Minister is expected to outline the next steps for Brexit which could see considerable market reaction if there is any shift in policy.
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