- The exchange rate reached $1.31 on Wednesday
- USD fell across the board as markets react to the country’s midterm elections
- A looming deadlock in the US is being anticipated, according to reports
The British pound climbed up to 0.3 percent against the American dollar on Wednesday as markets were still digesting the results of the midterm elections in the United States. The value of the sterling reached $1.31 and it is expected to go up, analysts say.
Money exchange brokers have noted the fall of the dollar with Wednesday morning seeing its largest drop in three weeks.
A success?
Democrats are calling the elections a success as the party got a hold of half of Congress. Celebratory memes and messages were posted by democrats on social media starting Tuesday evening. While the House of Representatives is now divided, the Republicans still controls the Senate.
Political deadlock
Analysts say that this will likely result in a political deadlock, a situation that forex investors are keeping an eye on. It will also prevent Mr Trump from pushing his fiscal policies. Commerzbank strategist Esther Maria Reichelt said that the results are indicative of “political uncertainty” noting that “any big fiscal boost is unlikely which is pressuring the dollar lower”.
The pound, on the other hand, maintained its position on Wednesday thanks to the optimism about the Brexit. British and EU officials have been at the negotiating table the past week with the aim to finally arrive at an agreement. Just last week, the possibility of a Brexit deal seemed impossible.
Reports say the Prime Minister managed to get the support of the House of Commons for her Brexit plans.
