The pound to US dollar interbank exchange rate fell somewhat this week, in part because MPs voted to delay passing PM Johnson’s Brexit legislation. However, turning to America, key US economic data disappointed.

This may encourage the Federal Reserve to cut interest rates further next week, which traditionally weighs down the US dollar. Meanwhile, the Democratic Party’s attempt to impeach President Donald Trump gained traction.

US existing home sales fall, as prices keep rising

US existing home sales fell by -2.2% in September, according to the National Association of Realtors (NAR) this week. This was well below economists’ forecasts for a -0.7% fall. In part, this is because there’s a lack of affordable property available, thereby preventing many potential homeowners from buying.

To be specific, there are -2.7% fewer US homes available now compared to this time last year, at 1.83 million homes, while prices have risen for 91 consecutive months.

US existing home sales make up some 90% of US property sales, so this suggests that America’s construction industry is under some pressure to build more affordable homes.

US durable goods drop, Fed likely to cut next week

US durable goods drop, Fed likely to cut next week

US durable goods orders, which refers to long-lasting goods from refrigerators to aircraft, fell by -1.1% in September, said the US Census Bureau this week. This was the sharpest decline in four months.

Although the USA and China reached a recent “first phase” trade agreement, to end their tariff dispute, this won’t yet show up in America’s manufacturing statistics.

As a result, it looks increasingly likely that America’s central bank, the Federal Reserve, will cut interest rates for the third consecutive time next week, down to 1.5%-1.75%. This makes investing in USD-denominated assets less attractive for investors, potentially cutting demand for the US dollar.

Trump impeachment proceedings gather pace

Elsewhere, the Democratic Party’s attempt to impeach US President Donald Trump gained steam this week. In testimony to the House of Representatives, Mr. Trump’s top diplomat in Ukraine, Bill Taylor, confirmed that President Trump had offered a “quid pro quo” to his Ukraine counterpart, Volodymyr Zelensky.

President Trump said that he’d release withheld US military aid to Ukraine, if President Zelensky publicised that he was investigating President Trump’s Democratic rival, Joe Biden, for corrupt business dealings.

Mr. Taylor’s testimony has been described as the “smoking gun” Democrats were looking for, which may influence the US dollar in the coming weeks and months.

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