On Tuesday, the pound sterling traded higher amid the weakening of the dollar. The market expects the Bank of England to raise rates by 25 basis points.
On Tuesday, the pound sterling showed a slight increase, and the euro also strengthened. This occurred against the backdrop of the weakening of the US dollar, caused by a decline in oil prices and investors' positioning ahead of the US midterm elections.
Market participants are waiting for the Bank of England meeting on Thursday. According to forecasts, the regulator will raise the key rate by 25 basis points, bringing it to 4%. By 13:09 Moscow time, the pound rose to 1.3441 dollars, and the euro to 1.1187 dollars.
In the US elections, ING analysts expect Democrats to win in the House of Representatives. The probability of Democrats maintaining control of the Senate is estimated at 74%. According to ING strategist Francesco Pesole, a complete Democratic victory could put pressure on the dollar, but will not lead to structural changes in the currency market. The dollar still reacts mainly to news from the Federal Reserve System.
Traders are also monitoring data on the number of job openings in the US, the announcement on Treasury refinancing, and the employment report. ING notes that the pound is trading confidently due to expectations that high energy prices will force the Bank of England to tighten policy. A 7 to 2 vote ratio in favor of raising the rate is forecasted.
For the EUR/USD pair, analysts highlight support at 1.1102 and resistance at 1.1268. The consensus forecast suggests growth of the pair to 1.14 by the end of the year and to 1.15 in the first quarter of 2027. For the pound, the key risk factor remains the 'hawkish' signals from the Bank of England about possible further policy tightening.