British Pound holds steady as focus shifts to US Midterm Elections

• Ahead of the US Midterm Elections, the British Pound holds broadly steady against the US Dollar.
• A Democratic win in the House carries a 95% probability, while the chance of the party regaining the Senate stands at 79%, according to Deutsche Bank.
• A 7-2 majority is expected to back a 25 bps BoE policy rate increase to 4%.

At around 1.3410, the British Pound (GBP) is little changed against the US Dollar (USD) in Tuesday’s European trading session. Consolidation in GBP/USD reflects investors’ attention turning to the United States (US) Midterm Elections, due to begin later in the North American session.

Democrats look set to win both House and Senate

With the entire House of Representatives, a third of the Senate and 36 state Governors to be decided by voters, Deutsche Bank analysts call today’s US midterm elections “the main event,”.

Although Republicans hold both chambers of Congress, Deutsche Bank notes that “the incumbent President’s party usually loses ground in midterm votes.” According to its analysts, polling averages and prediction markets are “consistently pointing to Democratic gains today,” with Polymarket “giv[ing] the Democrats a 95% chance of victory in the House as of this morning, and a 79% chance of retaking the Senate.”

This week’s key US economic releases are also in focus, with particular attention on October’s Nonfarm Payrolls (NFP) report, due on Friday.

Before then, September’s US JOLTS Job Openings figures are due later today at 15:00 GMT. Estimates suggest US employers advertised 7.13 million new vacancies, a modest increase from August’s 7.097 million.

In the UK, Thursday brings the Bank of England’s (BoE) monetary policy decision. A 25 basis points (bps) interest rate rise to 4% is considered almost certain, with a 7-2 majority expected to support the move.

After a year of unchanged rates, strategists at Brown Brothers Harriman (BBH) say that “firmer UK inflation and economic activity back the move,”. They expect dovish policymakers Alan Taylor and Swati Dhingra to favour “supporting a hold”.

GBP/USD Maintains Bullish Bias Above the 20-Period EMA

Trading at 1.3410 on the daily chart, GBP/USD is continuing its recovery above the 20-period exponential moving average (EMA) at 1.3346, reinforcing the bullish near-term outlook. Immediate support from the EMA indicates that buyers are reasserting control. Meanwhile, the Relative Strength Index (14), at 58.31, remains in positive territory but has yet to flag overbought conditions. This suggests upward pressure could continue provided the price stays above the moving average.

The 20-period EMA at 1.3346 provides initial downside support, while the 1.3410 region serves as a near-term pivot that would have to break to dent the positive tone. As this dataset shows no significant technical resistance directly above the current price, GBP/USD looks positioned to test higher levels. A daily close below the EMA, however, would erode the bullish structure and leave scope for a deeper corrective decline.

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