US Midterm Elections in focus as British Pound holds steady

• Ahead of the US Midterm Elections, the British Pound holds broadly steady against the US Dollar.
• A 95% probability of a Democratic House victory and a 79% probability of the party regaining the Senate are cited by Deutsche Bank.
• A 25 bps increase to 4% is expected from the BoE, backed by a 7-2 majority.

1.3410 is roughly where the British Pound (GBP) trades against the US Dollar (USD). Sterling is little changed in Tuesday’s European session. Consolidation in GBP/USD comes as investors turn to the United States (US) Midterm Elections, which begin later in the North American session.

Democrats favoured to win House and Senate

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

Although Republicans hold both chambers of Congress, Deutsche Bank notes that “the incumbent President’s party usually loses ground in midterm votes.” Polling averages and prediction markets are “consistently pointing to Democratic gains today,” the bank adds, 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.”

Friday’s October Nonfarm Payrolls (NFP) report is a particular focus for investors awaiting this week’s key US economic releases.

Before then, September’s US JOLTS Job Openings report is due at 15:00 GMT later in the day. Financial markets will watch the release, with estimates putting fresh job postings by US employers at 7.13 million, marginally above August’s 7.097 million.

Thursday brings the Bank of England’s (BoE) monetary policy announcement, the focus for investors across the Atlantic. A 25 basis points (bps) interest rate rise to 4% is considered almost certain, with a 7-2 majority expected.

Following a year of unchanged rates, Brown Brothers Harriman (BBH) strategists contend that “firmer UK inflation and economic activity back the move,” while identifying doves Alan Taylor and Swati Dhingra as likely to favour “supporting a hold”.

1.3410: GBP/USD Technical Outlook

At 1.3410 on the daily chart, GBP/USD continues its recovery above the 20-period exponential moving average (EMA) of 1.3346. That position supports a bullish near-term outlook. Immediate support from the EMA indicates that buyers are reasserting control. Meanwhile, the Relative Strength Index (14) stands at 58.31, in positive territory but not yet signalling overbought conditions. Upward pressure could therefore continue while the price remains above the moving average.

The 1.3410 area serves as a near-term pivot; a break below it would undermine the positive tone. Initial downside support lies at the 20-period EMA of 1.3346. As this dataset shows no major technical resistance immediately above the market, 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.

(An AI tool assisted in preparing this story’s technical analysis. Learn more.)