British Pound nears 1.3500 against US Dollar amid Trump's defeat in US midterms
The British Pound (GBP) accelerated its rally against a weak US Dollar (USD) on Wednesday, boosted by news that the Democrats took control of the House and the Senate in the US midterm elections held on Tuesday.
On Wednesday, the British Pound (GBP) surged against the US Dollar (USD), propelled by the Democrats' victory in the US midterm elections held on Tuesday. The GBP/USD exchange rate surged past the 0.3480 mark, achieving seven-week highs. This rally was triggered by fears that Democrats would impose stricter regulations in the AI sector and curb data center growth, leading to a sell-off in AI-related stocks and a rush to safety in government bonds.
Analysts at Rabobank noted that the market initially interpreted Democrat control of Congress as a sign of "fewer fiscal giveaways and therefore lower inflation," which would lead to lower treasury yields and negatively impact the USD. The Pound has been showing a moderately positive trend in recent days, backed by expectations that the Bank of England (BoE) might increase its interest rate by a quarter-point to 4.0% after its monetary policy meeting on Thursday.
However, the BoE's monetary policy committee appears divided, and a dovish hike could prompt a substantial pullback, as pound bulls might opt to lock in profits.
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Also reported by 2 other outlets
- US midterms: What Trump's defeat means for Europe and global markets euronews.com
- US midterms: Impact on Trump's political authority & market implications business-standard.com
