The US dollar dropped against the British Pound on Friday as the US Senate decided to delay a key part of the Republican tax reform for one year. The delay widely disappointed investorsâ hopes for a swift release of a list of tax cuts that would have provided a boost for the economy.
Republicans at the Senate unveiled a tax plan on Thursday that greatly differed from the plan that Republicans of the House were hoping to pass. The Senateâs plan will delay a massive cut to corporate taxes for a full year, while maintaining some other cuts to individual tax rates and some modifications to estate taxes.
Senate Finance Committee Chairman Orrin Hatch said in the announcement of the Senate tax plan that it will aim to provide a direct substantial relief to low and middle income families and workers. He added that the plan will also bring corporate tax rates down in the long run, which will help modernize the US tax system.
The delay that the Senateâs plan includes will reduce the overall cost of the tax cut package. However, the House Ways and Means Committee approved a revised bill that reduces the top corporate tax rate by the same amount, from 35% to 20%.
Overhauling the US tax system was one of the major promises that President Donald Trump made during his presidential campaign, with the corporate tax cut being a highly anticipated ingredient. The delay that the Senate imposed on that cut delivered yet another blow to investorsâ confidence in the ability of the Trump administration to achieve its goals.
The US dollar rapidly rose following Trumpâs election victory in November 2016. Now, a year later, the currency gave up all of the gains it made as the US president failed to deliver on one promise after another. The latest development in the tax reform story added further pressure on the greenback.
Traders are now anticipating the outcome of the consumer confidence data that is due to be released by the University of Michigan later today. Last monthâs data showed a weaker consumer confidence than analystsâ expectations.
GBP/USD traded at 1.3174 as of 11:35 GMT on Friday after surging to 1.3185 at 11:10 GMT, a level last seen on November 2. GBP/USD began the day at 1.3148. EUR/USD was at 1.1643 after rising to 1.1659 at 08:55 GMT, the pairâs highest level since November 3. EUR/USD began trading today at 1.1652.
The Dollar Index, which tracks the performance of the US currency against a basket of its major peers, was at 94.48 as of 11:30 GMT today from 94.45 yesterday.
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