British Pound near seven-week high as US elections dent USD, BoE looms

• GBP/USD hits a seven-week high of 1.3503 before retreating below 1.35.
• The US Dollar slides as election results favor Democrats.
• BoE rate hike fully priced ahead of Friday’s US Nonfarm Payrolls.

The Pound Sterling rallies to a seven-week high against the Greenback on Wednesday, in the aftermath of the US midterm elections, in which the Democrats are poised to win the US House of Representatives and the US Senate.  This is a hard blow for US President Trump, who congratulated the Democrats and hinted at openness to negotiate with them. The GBP/USD trades near 1.3500, up 0.55%.

GBP/USD rallies toward 1.3500 as US election results weaken the USD; up next the BoE

The US Dollar Index (DXY), which tracks the performance of the buck against six currencies, edged down by over 0.47% to 101.41 after polls revealed that US voters wanted the Democrats as a counterweight to the White House. Additionally, US Treasury yields eased, and US equity markets advanced, as some analysts noted that markets fared better when no single party could push legislation through a party-line majority.

Regarding the US-Iran conflict, negotiations continued even though Iran reported that a US drone was destroyed. A senior Iranian official said that Tehran is far from reaching a deal with the US to end the conflict, CCTV reported, citing unnamed sources.

Despite this, Oil prices edged lower amid speculation among market participants that Washington and Tehran could strike a deal in the near term.

Data from the US revealed that the ISM Services Purchasing Managers’ Index (PMI) for October was softer than expected, coming in at 54.5, down from 54.9 a month ago and below estimates of 54.8. Digging into the survey, the employment sub-component rose, while new orders and prices paid retreated but remained in expansionary territory.

Earlier, the ADP Employment Change in October showed private hiring held steady, with companies adding 86K workers, exceeding forecasts of 69K.

In the UK, eyes are on the Bank of England's policy decision on Thursday. Money markets had priced in a 100% chance of a hike, but for the December meeting, the chances of another Bank Rate increase are 26%, according to Prime Terminal.

Ahead, the US economic docket will feature Initial Jobless Claims for the week ending October 31, as well as speeches by Fed officials on Thursday. On Friday, the eyes are on the Nonfarm Payrolls report, with analysts expecting the US economy to add 65K people to the workforce.

GBP/USD Price Forecast: Technical outlook

In the daily chart, GBP/USD trades at 1.3465, maintaining a bullish near-term bias as spot holds above the latest simple moving average at 1.3368 and above the reclaimed downward resistance trend line break at 1.3384. The pair also trades over the earlier bearish break level at 1.3239, turning it into underlying demand, while the Relative Strength Index (14) at 63 suggests firm but not yet extreme positive momentum, reinforcing the constructive tone.

On the downside, immediate support aligns with the current price area near 1.3465, followed by the former downward trend line break around 1.3384 and the simple moving average cluster at 1.3368, ahead of deeper structural demand at the old resistance break near 1.3239. On the topside, bulls face initial resistance at the upward-sloping support trend line break around 1.3676, with a higher barrier at the second rising trend line break near 1.3849, where any rejection would hint at a pause in the current advance.

(The technical analysis of this story was written with the help of an AI tool. Know more.)