The pound rose to 1.3500 against the dollar — its highest since mid-September. At the time of publication, the pair had pulled back to 1.3473. The DXY dollar index was down 0.47% and had fallen to 101.40.
DXY is the dollar's exchange rate against a basket of major currencies. Its decline means the dollar is weakening against all key currencies at once, not just the pound.
The reason came from the US. The Democrats took both chambers of Congress, and the market began selling off the dollar. For a pound trader, this means the pair is now being driven by two forces: politics in Washington and the rate in London.
Where did the pound hit resistance technically?
The rally stopped at 1.3469. This is the 61.8% retracement level of the previous decline.
- 1.3560 and 1.3676 — the next targets above
- 1.3406 — the nearest support below
- 1.3358 — the 20-day average
- 1.3136 — the cycle low
- 64 — the daily RSI
RSI is an overbought indicator on a scale from 0 to 100.
Why is the whole dollar falling?
The dollar's weakness is visible across more than one pair. USD/JPY dropped below 158.00, a one-month low for the dollar.
- $4,000 — gold returned above this mark and approached $4,050
- 0.8350 — EUR/GBP is holding around this level
ING analysts point to the risk of prolonged disputes between Congress and the White House. They will argue over government funding and the debt ceiling. Restrictions on artificial intelligence spending are also possible there.
What's on the calendar this week?
Two dates will determine the pair's movement.
- The US session. ADP and the ISM services business activity index are released. ADP is the US private-sector employment report, forecast at 69k new jobs for October versus 90k in September.
- Thursday, November 5, 15:00 Moscow time. The Bank of England rate decision. Market consensus is 4.00% versus the current 3.75%, i.e. the first change after a year-long pause.
The vote is expected to split roughly 7-2. According to Brown Brothers Harriman expectations, Alan Taylor and Swati Dhingra will vote against the hike.
What does this mean for a trader?
The pound is now being driven by two sources at once: US politics and the London rate. The second event falls at a fixed time and is easy to find in the economic calendar.
Key point: the Bank of England decision is out Thursday at 15:00 Moscow time — the timing is known in advance, unlike news from Washington.
Did you trade the pound on vote-count night?
The GBP/USD week delivers two events back to back: the US election results and the London rate on Thursday at 15:00. Those who trade these dates know the timing by heart, but skim their account rules. The variation in rules is wide. Somewhere a central bank decision is an allowed window, somewhere a trade in those minutes zeroes out the account, somewhere leverage is cut several times over during the news. It's wiser to check the terms before the start, not while disputing a denied payout.