Pound Sterling underperforms US Dollar despite US government shutdown

The Pound Sterling slides to near 1.3420 against the US Dollar as the Greenback rebounds strongly.
The US Dollar gains even as Washington faces mass lay-offs risks amid the government shutdown.
Investors await speech from BoE Governor Bailey at 17:30 GMT.

The Pound Sterling (GBP) trades 0.4% lower to near 1.3420 against the US Dollar (USD) during the European trading session on Monday. The GBP/USD pair faces selling pressure as the US Dollar rebounds strongly despite growing risks that the White House would be forced to make mass lay-offs in the wake of a partial United States (US) government shutdown.

The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, gains 0.55% to near 98.25.

Over the weekend, the White House signaled that mass lay-offs of federal workers are around the corner as the short-term funding bill is unlikely to be passed by the US Senate in the voting on Monday. “US President Donald Trump and White House budget director Russ Vought are lining things up and getting ready to act if they have to, but hoping that they don’t,” National Economic Council Director Kevin Hassett told at CNN’s “State of the Union” program.

Republicans struggle to force Democrats to support the stopgap bill as the latter are demanding that the White House to make a permanent extension of enhanced premium tax credits to help Americans purchase private health insurance through the Affordable Care Act and ensure that it will not try to unilaterally cancel spending agreed to in any deal, Reuters reported.

Meanwhile, US Senators are scheduled to meet again on Monday to vote on the stopgap bill. Recent comments from Democrats have signaled that they are unlikely to vote in favour of supporting the short-term funding bill. Democratic Senator Ruben Gallego told CNN, “At this point, no,” after he was asked whether lawmakers are close to reaching a deal.