The control in the senate remains the determinant of the market’s pulse on Biden administration.
In the latest update, the Democrats are leading in the runoff votes which could give way to a bigger spending new administration.
With this, the dollar releases gains made during the early trading session.
The USD index, tracking the performance of the greenback against other entities in the basket, slid by 0.2%. It settled to a new two and a half year low at 89.328.
Earlier in the day, US news outlets reported that Democrat Raphael Warnock is set to win one of the two posts currently vied for.
Consequently, a fellow Democrat Jon Ossoff is also leading the polls, currently holding 13,000 of the votes with 99% of the votes counted.
Traders are pricing their bets according to the perception that a Democrat-led Senate and a Joe Biden Presidency will result in a bigger stimulus package and greater infrastructure spending.
This, in turn, turns out to consolidate downward pressure on the USD as bigger spending undermines the value of the world’s reserve currency.
Consequently, an analyst noted that investors are currently fluctuating towards riskier assets and a weak greenback may stay for longer.
In Asia, the yen remained below the 103 psychological support threshold after settling at 102.72. It is nearing to approach a 10-month low of 102.60 which is hit earlier.
Meanwhile, the Chinese yuan traded flat for the day after the painful setback in the previous session which sent the currency to its June 2018 low. The CNY/USD pair steadied at 6.4552.
In an update on emerging market currencies, the Israeli shekel surged to its highest in more than two decades.
The Pound’s Performance in the First Week of 2021
This is amid the news that the country’s vaccination process is swifter than any country in the world.
Meanwhile, the pound may struggle to maintain the good momentum of last year as England is placed on another nationwide lockdown to last until February.
The tighter containment mechanism ignites another downward pressure for the sterling amid business closing.
Consequently, with economic activities put in another batch of restrictions, consumer spending will hurdle another difficult path towards recovery.
Earlier, experts in the field projected that the GBP may reach $1.37 against the dollar, especially with the Brexit trade deal in place.
According to an expert in the field, the pound may have difficulty surging with the present condition, undermined by a growing number of infections and strict lockdowns.