Pound Rises as Dollar Weakens After Democrats Win US Midterm Élections

Democrats won control of both the House and the Senate in the U.S. midterm elections, and the dollar weakened against the pound and the euro, Yahoo Finance reported. Sterling climbed 0.60% against the dollar to $1.3495, while the euro gained 0.63% to $1.1262 at 11:25.

The result weighed on the greenback. Even before the vote, on Oct. 30, traders had been closing long dollar positions: GBP/USD rose about 0.41% to around 1.3432 and the euro reached nearly 1.1203, Capmad reported.

Democrats Take Seven Senate Seats and at Least 232 House Seats

The Democrats picked up seven Senate seats, including in South Carolina, Maine and Texas, and won at least 232 House seats and 54 Senate seats, Yahoo Finance reported. The new Congress does not take office until January.

Turner: A Democratic Congress Is “Slightly Negative for the Dollar”

Chris Turner, ING’s global head of markets, told Yahoo Finance that a Democratic Congress would be “slightly negative for the dollar,” citing implications for artificial-intelligence spending and the risk of a prolonged government paralysis from next summer. “The overnight price action could offer a taste of what awaits markets in 2027,” he said, adding, “We would not seek to accentuate the dollar’s decline today for what might, after all, be only a 2027 story.”

Turner said the dollar index’s overnight low of 101.25 “appears to constitute an important support level that could hold until tomorrow’s October jobs report.” He described the backdrop as “a solid U.S. economy and a Fed ready to tighten its monetary policy further,” and noted that any disruption in the bond market would affect USD/CHF as it did in August.

Sterling’s Gains Also Ride Bank of England Rate-Hike Bets

Trading Economics put sterling at $1.347, its highest since Sept. 15 — a slightly lower figure than Yahoo Finance’s $1.3495, reflecting different timestamps — as investors also priced in a Bank of England rate increase on Thursday, widely expected to be the first since 2023. Mounting inflation pressures from the war in Iran, combined with signs of British economic resilience, strengthened the case for tighter policy, though policymakers were expected to oppose market expectations of several more hikes next year. Capmad noted the pair had recovered from a low near 1.31 earlier in 2026 and was approaching its 200-day moving average, a key technical resistance.

ADP Data, ISM Services and the Treasury Refunding Lie Ahead

Catalysts for the day include ADP employment data, the October ISM services index and the Treasury’s quarterly refunding announcement, with official employment data due Friday, Yahoo Finance reported. Turner’s position is that the dollar “should continue to be traded through the macroeconomic and monetary policy prism, which remains supportive.” That dynamic would change if the DXY fell below 101.25, if eurozone core inflation surprised to the upside, or if tech-stock weakness resumed.

Midterm Election and the Dollar: Three Questions Answered

Why did the dollar weaken after the election? Democrats took both chambers of Congress, and ING’s Chris Turner said that outcome is “slightly negative for the dollar” because of AI-spending implications and the risk of a prolonged government shutdown from next summer.

What support level is the dollar index defending? The overnight low of 101.25, which Turner said appears to be an important support that could hold until the October jobs report due Friday.

When does the new Congress actually take power? In January. Turner said the overnight moves could be an early taste of what markets face in 2027, but stressed that the new Congress is not seated before then.

Whether the dollar’s slide proves to be a 2027 story or begins now remains the open question. The tests are already scheduled: the October jobs report on Friday, the Bank of England’s decision on Thursday, and a Congress that does not convene until January.

More on this story: US Dollar Falls as Fed Holds Rates · European Stock Markets Rally After US Midterms as Democrats Win Congress

More on Democrats: Democrats Sweep US Midterms as Economic Issues Trump Culture Wars · Democrats eye majority of US governors in midterm elections