The eyes of the financial world will be on Georgia tonight as voters determine who controls the US Senate. According to PredictIt betting markets, there's a 60% chance of Republicans keeping the Senate (More on what it means below).  Polls close at 0000 GMT. Will the Senate race involve a delayed outcome? Was Tuesday's rally an opportunity for markets to lift the markets for one last hurray before gridlock provides an excuse for deep profit-taking?

Chart

The combination of the Georgia race and the UK lockdown on Monday upended markets. The covid variants present a formidable threat to the reopening narrative in the months ahead and potentially for much longer in emerging markets where vaccine rollouts will extend deep into 2022. Sterling made a broad recovery from Monday's selloff, which was triggered by the UK's announcing a new shutdown of schools. 

Early voting data looks promising for Democrats and much of that shift occurred over the holidays, leaving little opportunity for market participants to place hedges so that may have been what kicked off the big reversal.

Looking beyond the results, the consensus view is that a Republican hold on the Senate is good for markets but that's highly debatable. Biden promised $2000 stimulus checks at a final rally Tuesday and a Democratic sweep would open the way to a highly stimulative agenda. The most straight-forward trade in that scenario may be precious metals along with broader commodities. Look for CAD and MXN to be the top FX beneficiaries on commodities and the spillovers from US spending.

How the vote plays out is an important consideration as well. It took nearly a week before the result of the Georgia general election was clear and the timeline in this vote will also extend well-beyond the close of polls. As in the November vote, the early tally will favor Republicans but mail-in voting will favor Democrats.

What's different this time is that market participants can use data from the general election to model and compare this vote. If Democrats look to be outperforming the November vote by 3-4 percentage points, it would indicate a sweep.

Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading and seek advice from an independent financial advisor if you have any doubts.

Recommended Content


Recommended Content

Editors’ Picks

EUR/USD remains near 1.0400 post-US PCE

EUR/USD remains near 1.0400 post-US PCE

The US Dollar’s inconclusive price action allows some recovery in EUR/USD, keeping the pair around the 1.0400 region following the release of PCE inflation data for the month of January.

EUR/USD News
Gold slumps to fresh multi-week lows below $2,840

Gold slumps to fresh multi-week lows below $2,840

Gold stays under bearish pressure and trades at its lowest level in three weeks below $2,840. The uncertainty surrounding the Trump administration's trade policy and month-end flows seem to be weighing on XAU/USD, which remains on track to snap an eight-week winning streak. 

Gold News
GBP/USD clings to gains just above 1.2600 after PCE data

GBP/USD clings to gains just above 1.2600 after PCE data

GBP/USD remains positively oriented in the 1.2600 neighbourhood as the Greenback is navigating a vacillating range following the PCE inflation release.

GBP/USD News
The week ahead – US Payrolls, ECB rate meeting, ITV results – W/c 3rd March

The week ahead – US Payrolls, ECB rate meeting, ITV results – W/c 3rd March

Having seen the Federal Reserve keep rates on hold last month the US labour market continues to show remarkable resilience, despite seeing a slowdown in hiring in January, after a blow out December number. 

Read more
Weekly focus – Tariff fears are back on the agenda

Weekly focus – Tariff fears are back on the agenda

While the timing of the EU measures remains still uncertain, Trump surprised markets on Thursday by signalling that the 25% tariffs on Canada and Mexico will be enacted when the one-month delay runs out next Tuesday. 

Read more
The Best brokers to trade EUR/USD

The Best brokers to trade EUR/USD

SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.

Read More

Majors

Cryptocurrencies

Signatures

Best Brokers of 2025