Sterling rises 0.3% to $1.3458 after Democrats win Congress

Key Facts

Sterling rose 0.3% against the dollar to $1.3458 in trading on Wednesday, November 4, after Democrats won control of Congress in Tuesday’s midterm elections, according to the Associated Press. In the Asian session, the pair moved above the midpoint of the 1.3400 range and reached its highest level since September 16, according to FXStreet. EL7 data showed the pair’s daily close at 1.34606. FXStreet attributed the dollar’s weakness to the election results and the expectations they raised of political gridlock in Washington. The gains came amid a broader decline in the U.S. currency and Treasury yields.

The dollar index fell 0.6% to 101.27, its lowest level in a month, as the 10-year U.S. Treasury yield declined by about 5 basis points to 4.915%, according to Reuters via WHBL. FXStreet linked the dollar’s move to the possibility that Democratic gains would lead to gridlock in Washington, prompting safe-haven flows into Treasuries and putting pressure on yields. The report said those flows and lower yields accompanied weakness in the U.S. currency, while sterling rose during the session. This reading reflects a market interpretation of price moves following the election. An ING analyst had said before the results emerged that a Democratic victory could weigh on the dollar, but did not expect the election to bring a structural shift in foreign exchange markets.

An OCBC analyst said the market move was consistent with concerns that a Democratic victory could bring tighter regulation of the artificial intelligence sector and what that might mean for U.S. growth. The analyst said, "Concerns about U.S. growth could increase if artificial intelligence faces tighter regulation." The analyst also noted that passing federal legislation remains difficult because the president has veto power. Stephen Brown of Capital Economics said Democratic gains do little to change near-term political expectations, because the party lacks enough votes to overcome a filibuster in the Senate and the president can veto legislation. These political constraints feature alongside investor bets on the election result’s impact on the dollar.

The currency moves came as U.S. manufacturing data showed the sector expanded for a tenth month, according to the available evidence summarized in the Institute for Supply Management report. U.S. job openings stood at 7,523,000 in September 2026, according to the latest figures from the Bureau of Labor Statistics. Not all of these data were new on Wednesday, but they provide a backdrop for a market weighing activity and employment signals against the effect of U.S. policy on the currency. FXStreet also said President Donald Trump’s remarks on Iran bolstered optimism about the possibility of a diplomatic solution. The report quoted him as telling the Financial Times on Tuesday, "The United States is not planning an immediate strike on Iran."

Asian stocks were mixed in Wednesday’s trading as investors digested the Democrats’ victory in winning majorities in both chambers, according to the Associated Press. Japan’s Nikkei fell 1.4% to 62,188.63 points, while South Korea’s Kospi rose 0.6% to 5,683.80 points. Hong Kong’s Hang Seng index advanced 1.1% to 23,791.61 points. The mixed performance shows the election result did not have a uniform effect across regional markets. In currency markets, attention turned to the Bank of England’s decision due the following day.

Traders were awaiting the Bank of England’s monetary policy announcement on Thursday, November 5, with markets expecting the first rate increase since August 2023, according to Reuters via WHBL. At its previous meeting in September, the bank held the interest rate at 3.75% by a 6-3 vote, while the three dissenting members preferred a 0.25 percentage point increase to 4%. The bank scheduled publication of the meeting summary and minutes, along with its Monetary Policy Report, for 12 noon UK time on November 5. After that, the Bureau of Labor Statistics will release the U.S. October employment situation report on November 6 at 8:30 a.m. Eastern Time. These two releases will add new data for traders monitoring both currencies.