US Senate approves the $1.5 BN tax bill

Overnight on Tuesday, the US senate approved a tax overhaul put forward by the President Trump, that includes tax breaks for corporations and a more relaxed approach on taxes towards individuals. The has been widely considered a victory for President Trump and the Trump administration which has been under pressure and much to blame for the Dollar’s weakness of late. The move by the senate is seen by many economists as a positive for the US Dollar, which was reflected by US 10 year yields rising to 2.5% from 2.3% and could further support the Dollar moving into the new year.

What is likely to influence GBPUSD moving forward

The US is likely to end the year on high tomorrow, with the final Gross Domestic Product figures being released. The reading is widely expected to remain unchanged from 3.3%, however any movement away from this figure is likely to carry some bearing on the Dollar. What would carry more significance is if this figure drops from the 3.3% predicted, this could off set the Federal Reserve’s plans to raise interest rates. The currency markets move on rumour, the Dollar strengthened after the latest Federal Reserve minutes as the 2018 dot plan predicted a further 3 interest rate hikes in 2018. Due to almost stagnant inflation in the US, the labor market has been the main reason why the US have been able to hike rates, any signal of a slowdown could carry a large significance to the USD. On the 28th December, whilst most of us will be enjoying a well-deserved Christmas break, US initial jobless claims will be released.