Forex News
- GBP/USD rallies 0.5% on Wednesday and reaches fresh seven-week highs above 1.3480.
- The US Dollar tumbled across the board amid news of the Democrats' victory in the US midterm elections.
- Market expectations of a BoE rate hike on Thursday have been boosting the Pound over the last few days.
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. The GBP/USD has appreciated 0.5% on the day so far, reaching seven-week highs above 0.3480 at the time of writing
News from the US has confirmed resounding disapproval of President Donald Trump’s policies, which has reached strongholds such as Kansas, Ohio, North Carolina, and Texas, which have been governed by Republicans for decades.
The US Dollar dropped across the board immediately after the release of the first results showing the Democratic victory. Investors fear that Democrats will push for tougher regulation in the AI sector and put a brake on data center growth, which triggered a selloff in AI-related shares and a rush for safety into Government bonds.
Analysts at Rabobank also note that markets had initially read Democrat control of Congress as a signal of “fewer fiscal giveaways and therefore less inflation,” a combination that “suggests lower yields on treasuries which have negative implications for the USD.”
Markets brace for a BoE rate hike on Thursday
The Pound, on the other hand, has been showing a moderately bid tone over the last few days, supported by hopes that the Bank of England (BoE) will hike its Bank rate by a quarter-point, to 4.0% after its monetary policy meeting on Thursday.
What is not that clear, though, is what will come next. The BoE’s monetary policy committee shows split on further monetary policy tightening, according to recent comments by BoE policymakers and Government Bailey has shown a tendency to play down inflation pressures. A dovish hike on Thursday might trigger a significant pullback as pound bulls might be tempted to take profits.
US midterm elections FAQs
The US midterm elections are the federal elections held halfway through a president's four-year term. Voters choose all 435 members of the House of Representatives, about one-third of the Senate, and, in many states, governors and other state and local officials.
Election Day is Tuesday, November 3, 2026. Federal law sets it as the Tuesday after the first Monday in November. Early voting and mail voting are already under way in many states.
They decide which party controls each chamber of Congress for the last two years of President Donald Trump's term. The majority party sets the legislative agenda, chooses committee leaders and, in the Senate, controls confirmations of judges and senior officials.
No. The president is elected every four years; the next presidential election is in November 2028. Midterms are often seen as a referendum on the sitting president's party, which historically tends to lose House seats.
Most analysts expect a modest, short-lived reaction in the US Dollar rather than a lasting trend. A divided Congress is widely seen as the base case and is partly priced in. Treasury yields may react more noticeably to the results. Outcomes that raise expectations of fiscal stimulus tend to lift yields and the US Dollar, while gridlock that limits new spending can pull both lower. Political friction, such as funding or debt-ceiling standoffs, can also briefly lift the Dollar as a safe haven. Over six to twelve months, growth and Federal Reserve policy matter more than the vote.
US stocks have historically been weak before midterms and strong after them. Since 1950, the S&P 500 has been higher 12 months after every midterm election, 19 out of 19, with an average gain of about 15%. Analysts link the pattern to uncertainty fading once results are known. Past performance does not guarantee future returns, and some strategists note that high valuations in 2026 could test the streak.
Markets have often welcomed a divided government because gridlock makes sweeping changes to taxes, spending and regulation less likely. Under a Republican president, the S&P 500 has historically done well in years following midterms that split control of Congress. The risks are funding deadlines, debt-ceiling fights and congressional investigations, which can add short-term volatility.
- WTI could rise amid geopolitical tensions and US election shifts.
- Traders monitor US-Iran tensions and potential policy shifts after Democrats capture Congress.
- Conflicting US military signals and recent price rallies prompt traders to take profits.
West Texas Intermediate (WTI) depreciates after posting modest gains in the previous day, trading around $95.00 per barrel during European hours on Wednesday. Crude oil prices may appreciate as market caution emerges ahead of Washington's decision in the US-Israeli war on Iran. This shift comes after Democrats captured control of Congress from President Donald Trump's Republicans in the midterm elections. Vote counting was underway in the US midterms, with Democrats snaring majorities in both houses of Congress for the rest of Trump's second term.
According to Reuters, Priyanka Sachdeva, head of market insights at Phillip Nova, noted that "President Trump's conflicting signals, with military strikes continuing alongside statements downplaying further escalation, have made it difficult for traders to build strong directional conviction". She added that "some profit-taking and reduction in speculative long positions are justified, particularly after the sharp rally in October".
Diplomatic efforts and ongoing military action continue to shape the regional landscape. Qatar’s Foreign Ministry spokesperson stated that both countries are currently evaluating new proposals put forward by mediators to bridge their differences. However, Iran’s national security chief indicated in a social media post that Washington’s response remains unsatisfactory.
Meanwhile, the US conducted defensive strikes against Iran earlier this week, targeting surface-to-air missile systems used against American assets. Nevertheless, the limited scope of these strikes suggests there is no immediate return to large-scale military operations.
Nasdaq and USD rebound as Trump signals willingness to work with Democrats
Analysts at Rabobank observe that “on the back of the Democrat sweep in Congress in the US mid-term election both Nasdaq futures and the USD predictably softened.” However, they note that “perhaps the bigger surprise is that both have already started to reverse their early losses,” a move they link directly to “comments that President Trump is looking to work with Democrats in Congress.” This rapid shift in market tone highlights how quickly US assets can reprice as political signals evolve.
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
United Overseas Bank’s (UOB) Quek Ser Leang and Lee Sue Ann highlight a sharp pickup in upward momentum in GBP/USD after recent gains. Intraday, the British Pound (GBP) is expected to hold above 1.3410 and potentially rise toward 1.3480, with 1.3510 seen as a higher resistance. Over the 1–3 week horizon, they continue to see scope for a test of 1.3480 as long as 1.3385 support holds.
Pound-Dollar upside scope extends
"24-HOUR VIEW: GBP soared to a high of 1.3448 on Monday and then pulled back. Yesterday, we stated that “upward momentum has increased, but it is insufficient to indicate a continued rise.” We expected GBP “to consolidate between 1.3380 and 1.3435.” Our view of consolidation was not wrong, even though GBP traded within a narrower range of 1.3397/1.3432, closing little changed at 1.3414 (+0.04%). Today, British Pound (GBP) rose sharply and there has been a rapid increase in upward momentum. From here, as long as GBP holds above 1.3410, it could rise to 1.3480. A break above this level is not ruled out, but the next resistance at 1.3510 is likely out of reach."
"1-3 WEEKS VIEW: Following our positive GBP view from last Friday, we highlighted yesterday (03 Nov, spot at 1.3410) that “there is scope for GBP to test 1.3480.” We will continue to hold the same view as long as 1.3385 (‘strong support’ level was at 1.3360 yesterday) is not breached. Looking ahead, the next level to watch above 1.3480 is 1.3510."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- Indonesian Rupiah weakens as lowered 2026 GDP forecasts, high oil prices, and rising imports weigh on fiscal sentiment.
- Bank Indonesia relies increasingly on Non-Deliverable Forwards (NDFs) to maintain active currency intervention efficiently.
- Broad US Dollar weakness following Democratic midterm victories helps limit further losses for the USD/IDR pair.
USD/IDR remains stronger for the third consecutive day, trading around 18,200 during European hours on Wednesday. The currency pair is moving higher as the Indonesian Rupiah (IDR) struggles under the weight of mounting domestic concerns.
Ahead of the Q3 GDP data release on Thursday, Finance Minister Suahasil Nazara lowered the nation's 2026 growth projection to 5.4%–5.5%, down from 5.6%–6%, signaling a further slowdown from the 5.29% year-on-year growth recorded in Q2. Adding to these fiscal and external pressures are elevated oil prices, rising import volumes, and volatile export revenues.
Bank Indonesia (BI) maintained that its currency interventions have proven effective, with Governor Destry reaffirming the central bank's commitment to an active market presence through a greater reliance on Non-Deliverable Forwards (NDFs) to lower the costs associated with direct spot interventions.
However, further gains in the USD/IDR pair remain constrained by broad weakness in the US Dollar following Tuesday's midterm elections. With Democrats winning control of the US House of Representatives from the Republicans, market participants are anticipating potential shifts in congressional leadership and renewed uncertainty over future US fiscal policy. According to live data from Decision Desk HQ, results have been called in 253 of the 435 House seats, with Democrats holding 152 seats compared to the Republicans' 101 in the pursuit of the 218 required for a majority.
Meanwhile, global financial markets are closely tracking geopolitical developments and interest rate expectations. Traders are evaluating the potential resumption of US military strikes against Iran as diplomatic talks drag on, with both Washington and Tehran reviewing mediation proposals following reported US airstrikes on Iran’s Qeshm Island. While softer energy prices could ease expectations for prolonged monetary tightening, data from the CME FedWatch Tool shows markets are still pricing in a 79% probability of a Federal Reserve rate hike in December.
Dollar steadies as markets reassess impact of Democrat-led fiscal restraint
Analysts at Rabobank note that investors had been braced for the possibility that Democrat control of Congress would mean “fewer fiscal giveaways and therefore less inflation,” a combination that “suggests lower yields on treasuries which have negative implications for the USD.” However, they point out that the initial reaction has already begun to fade, with the “DXY dollar index” having “already started to reverse some of its initial losses” as markets reassess the policy outlook.
Indonesian Rupiah FAQs
The Indonesian Rupiah (IDR) is sensitive to a dynamic mix of global market conditions, domestic economic fundamentals, commodity price shifts, and proactive central bank interventions. As an emerging market currency, the Rupiah’s trajectory depends heavily on both domestic resilience and international economic momentum.
Bank Indonesia (BI) plays a central role in stabilizing the Rupiah through strategic monetary policy and direct market operations. By adjusting benchmark interest rates, the central bank manages yield differentials against major global central banks like the US Federal Reserve to attract and retain foreign portfolio investments. BI also utilizes a "triple-intervention" framework—operating across spot, derivative (DNDF), and government bond markets- to smooth out currency volatility, complemented by monetary instruments like Sekuritas Rupiah Bank Indonesia (SRBI) to bolster capital inflows.
From a broader macroeconomic perspective, domestic inflation rates, trade performance, and overall fiscal health dictate the IDR's underlying strength. Indonesia's trade and current account balances are closely tied to these fundamentals, while broader global factors, such as risk-on or risk-off sentiment among international investors and global liquidity trends, directly affect exchange rate movements.
As a major exporter of commodities such as palm oil, coal, nickel, and natural gas, Indonesia benefits from higher global commodity prices, which generate trade surpluses, increase foreign currency inflows, and strengthen the Rupiah. However, because Indonesia is also a net importer of crude oil, elevated global oil prices increase the foreign exchange burden, widening the current account deficit and weighing on the currency's value.
Japan’s Deputy Chief Cabinet Secretary Minoru Kihara said during the European trading session on Wednesday that the administration is closely tracking market moves with high sense of urgency. Kihara added, “Markets move on various factors.”
Market reaction
No major impact was seen on the Japanese Yen (JPY) after the release of Japan Kihara's comments. As of writing, USD/JPY is down 0.4% to near 158.00
Japanese Yen FAQs
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.
Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
- USD/JPY returns above 158.00 after bouncing from session lows at 157.39.
- The US Dollar dropped across the board following news reporting that the Democrats took control of the House and the Senate in the midterm elections.
- The sound US macroeconomic fundamentals and ongoing concerns about the Middle East conflict are providing support to the USD.
The Japanese Yen (JPY ) holds moderate gains against the US Dollar (USD) on Wednesday, but it has given back almost half of the ground taken following news of a sound Democratic victory in the US midterm elections. The USD/JPY trades near 158.15 as of writing after bouncing up from session lows at 157.39, although still below the intraday high, at 158.75.
Investors sold the US Dollar across the board during Wednesday’s Asian session as reports confirmed that the Democrats took control of Congress and also the Senate, which was more disputed, in a massive rebuke to President Donald Trump’s policies.
Fears of tougher AI regulation have spooked investors
Markets expect Democrats to implement regulation in the AI sector and put a brake on data center building. This has rushed investors into the safety of US Government bonds, pushing yields and the US Dollar lower and boosting traditional safe-havens such as the Japanese Yen and the Swiss Franc.
Looking from a wider perspective, however, the US Dollar remains supported by strong fundamentals, which are likely to limit downside attempts. Later on the day, the focus will shift to the US ADP Employment Change Report, which is expected to show a moderate slowdown in employment growth in October, while the ISM Services Purchasing Managers’ Index (PMI) is set to show levels consistent with solid business activity.
Beyond that, the conflict in the Middle East remains in a grey area, despite the ongoing efforts to resume the negotiating process, which keeps Brent Oil well above $100. The US launched a strike on Iranian targets hours before the elections, and Trump has kept the possibility of further strikes alive. Concerns about an all-out war would likely push Oil prices higher and restore the US Dollar’s safe-haven status.
US midterm elections FAQs
The US midterm elections are the federal elections held halfway through a president's four-year term. Voters choose all 435 members of the House of Representatives, about one-third of the Senate, and, in many states, governors and other state and local officials.
Election Day is Tuesday, November 3, 2026. Federal law sets it as the Tuesday after the first Monday in November. Early voting and mail voting are already under way in many states.
They decide which party controls each chamber of Congress for the last two years of President Donald Trump's term. The majority party sets the legislative agenda, chooses committee leaders and, in the Senate, controls confirmations of judges and senior officials.
No. The president is elected every four years; the next presidential election is in November 2028. Midterms are often seen as a referendum on the sitting president's party, which historically tends to lose House seats.
Most analysts expect a modest, short-lived reaction in the US Dollar rather than a lasting trend. A divided Congress is widely seen as the base case and is partly priced in. Treasury yields may react more noticeably to the results. Outcomes that raise expectations of fiscal stimulus tend to lift yields and the US Dollar, while gridlock that limits new spending can pull both lower. Political friction, such as funding or debt-ceiling standoffs, can also briefly lift the Dollar as a safe haven. Over six to twelve months, growth and Federal Reserve policy matter more than the vote.
US stocks have historically been weak before midterms and strong after them. Since 1950, the S&P 500 has been higher 12 months after every midterm election, 19 out of 19, with an average gain of about 15%. Analysts link the pattern to uncertainty fading once results are known. Past performance does not guarantee future returns, and some strategists note that high valuations in 2026 could test the streak.
Markets have often welcomed a divided government because gridlock makes sweeping changes to taxes, spending and regulation less likely. Under a Republican president, the S&P 500 has historically done well in years following midterms that split control of Congress. The risks are funding deadlines, debt-ceiling fights and congressional investigations, which can add short-term volatility.
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