The mid-term elections are due to take place today and will decide on the future of the US politically for the next two years. At the moment the decision is likely to be relatively close and historically speaking the Government has often lost seats in the House of the Representatives in the mid-terms.
The current expectation is that the Democrats are unlikely to win the Senate and possibly even lose some of their seats. However, in the House the Democrats need to win 23 Republican seats to take control which would effectively mean this would not let Donald Trump have as much control over some of the key policies he had initially pledged in his election campaign.
A total of 435 House seats will be up for grabs as well as 35 out of the 100 Senate seats in Congress. Former US Vice President Joe Biden has claimed that, "we are in a battle for America’s soul". With so much riding on the result so far the estimated spend on the election has exceeded USD$5bn.
The elections will close later tonight so expect the results to come out during tomorrow’s trading session, so make sure you’re well prepared for a lot of volatility during the course of this week if you’re planning on making a currency transfer involving US dollars.
The Pound has made some gains versus the US dollar, trading above 1.30 again after dropping in to the 1.27 level only just over a week ago, highlighting the impact of the election result.
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US jobs growth at the end of last week came out better than expected with wage growth at its best level in over 9 years. The jobless rate hit 3.7% and this could provide President Trump with a solid foundation to encourage voters to vote for the Republicans. Indeed, Trump tweeted on Friday saying ‘Wow! The US added 250,000 jobs in October. Keep it going. Vote Republican!’
With unemployment close to its lowest level on record and GDP remaining high the US can clearly afford to increase interest rates once again before the end of the year.
However, the combination of better news surrounding the Brexit as well as the uncertainty of the mid-term elections has caused the US dollar to weaken against the pound creating some good opportunities to buy US dollars at the best level seen in the last fortnight.
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