US government shutdown sees pound climb

The prospect of a US government shutdown has seen the pound climb to its highest level against the dollar since Brexit, while cryptocurrency Bitcoin continues to decline.

US government shutdown sees pound climb

Sterling was trading at a high of 1.387 against the dollar today, for the first time in 18 months since Brexit.

Miles Eakers, chief market analyst at Centtrip, said the government was to blame. He said: “The fall comes amid the looming possibility of a government shutdown tomorrow, as Republicans struggle to secure a stopgap bill and Democrat leaders are blocking legislation to fund the government further until President Trump concedes ground on his immigration policy.

“Tomorrow may be the first time since 1979 that a funding gap led to a shutdown, when a president has had a majority in both the Senate and the House of Representatives.”

Lee Wild, head of equity strategy at interactive investor, agreed as he explained that milestones arrive quickly as the Dow Jones closed above 26,000 and S&P 500 better than 2,800 for the first time overnight.

He said: “Trump’s pro-business reforms, healthy outlook for corporate profits and an expanding global economy have fuelled the rally, and there could be much further to go if this is a classic ‘melt-up’, typical of late-stage bull markets.

“While it’s getting harder to make a valuation argument in favour of US stocks, UK domestic equities look cheap in comparison.”

 Bitcoin “bloody end”

Bitcoin continued to decline and fell to $10,000 for the first time since 30 November 2017.

Concerns around a clampdown on regulations saw a 50% drop off in the last month, with the cryptocurrency trading at $19,343 (£13927.54) on December 16 2017 and with a low of $10,663 (£7677.68) today, according to CoinDesk.

Wild said: “If a month is a long time in politics, it’s an eternity in cryptocurrency land. Peaking at $20,000 just four weeks ago, bitcoin bounced by over $2,000, or 20% just hours after plunging close to $9,000.

“A clampdown by regulators risks bringing the crypto party to a bloody end, but there’s no guarantee the South Korean and Chinese governments will follow through on threats to ban the practice.

“Expect further extreme volatility as crypto traders are kept guessing.”

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