The GBP/USD currency pair also traded calmly throughout Tuesday, with little price movement. There is little reason for the market to rush, as the first results of the 2026 midterm elections will only begin to come in this morning. It is worth emphasizing once again that the Democrats are highly likely to win majorities in both chambers of Congress. Midterm elections generally have lower voter turnout than presidential elections, and this is likely to be the case this time as well. At the same time, experts point out that voter turnout is expected to be significantly higher than during the previous two midterm elections. They also note that midterm elections typically attract voters who are dissatisfied with the policies of the president and the ruling party, as well as those seeking to compensate for their preferred candidate's defeat in the presidential election. In other words, midterm elections generally attract Americans who oppose the current administration and want political change. Therefore, the high voter turnout in November 2026 is hardly surprising. As many as 55 million Americans had already voted remotely or early by November 3.
In this assessment, a Democratic victory could improve the U.S. dollar's position against the British pound. However, it is important to understand that, in this scenario, the dollar would strengthen against all currencies. Its performance against the pound has been relatively consistent and technically justified. A correction would not be unexpected. However, against the euro, the dollar has been declining for two consecutive months without interruption. Therefore, the elections could trigger a significant but short-lived market reaction. The dollar may strengthen temporarily, but currency traders will base their longer-term conclusions not on the Democrats' victory itself, but on the changes they manage to introduce to U.S. economic and political policy.
It is no secret that Donald Trump has no intention of supporting initiatives proposed by his rivals and political opponents. The U.S. president has already announced that he intends to assume the role of a veto-wielding president and simply block any Democratic proposals if the party wins the elections. At the same time, the Democrats will not be able to block Donald Trump's decisions. This raises an important question: what is the purpose of these elections if very little is likely to change?
Only one thing is likely to change. The Democrats will make every effort to challenge Trump's decisions through internal investigations, lawsuits, and any other available means. Their objective for the next two years, if they win the elections, will be to make governing more difficult for Trump. Consequently, the process of passing important legislation and making key decisions could quickly turn into an ongoing political confrontation between the two parties. As has become customary, another government shutdown is likely at the beginning of next year, as the Democrats are unlikely to allow further increases in government debt and spending. Therefore, the dollar could strengthen in the short term, but in the medium and long term, the outlook remains bearish. Technical analysis also favors the British pound, as GBP/USD has traded exclusively within sideways channels throughout 2026. These channels currently indicate a potential move from the lower boundary toward the upper boundary.
The average volatility of GBP/USD over the last five trading days stands at 63 points. This is considered a medium level of volatility for the pound/dollar pair. Accordingly, on Wednesday, November 4, the pair is expected to trade within a range bounded by 1.3354 and 1.3480. The upper linear regression channel has turned downward again. The CCI indicator entered the oversold area twice and also formed a bullish divergence, signaling the end of the downward trend.
Nearest support levels:
S1 – 1.3367
S2 – 1.3306
S3 – 1.3245
Nearest resistance levels:
R1 – 1.3428
R2 – 1.3489
R3 – 1.3550
Trading Recommendations:
The GBP/USD currency pair has started an upward trend, which could mark the beginning of a prolonged bullish movement. Donald Trump's policies will continue to put pressure on the U.S. economy, so significant long-term appreciation of the U.S. dollar is not expected. So far, 2026 has been favorable for the dollar due to geopolitical developments and inflation, which prompted capital outflows from riskier assets and forced the Fed to resume monetary policy tightening. However, the weekly timeframe still shows a sideways range between 1.3150 and 1.3780 within a four-year upward trend, supporting expectations of further appreciation of the British pound in the medium term. Long positions with targets at 1.3480 and 1.3489 may be considered when the price is above the moving average. If the price moves below the moving average, short positions with targets at 1.3306 and 1.3245 may be considered.
Explanations for the Charts:
Linear regression channels help identify the current trend. If both channels point in the same direction, the prevailing trend is strong.
The moving average (settings: 20.0, smoothed) identifies the short-term trend and the preferred trading direction.
Murray levels serve as target levels for price movements and corrections.
Volatility levels (red lines) indicate the probable price range within which the pair is expected to trade over the next 24 hours, based on current volatility readings.
The CCI indicator entering the oversold area (below -250) or the overbought area (above +250) indicates that a trend reversal in the opposite direction may be approaching.
