British Pound on the Decline as Traders Shift Attention to US Midterm Elections

Investor attention was on US inflation data and the midterm elections on Tuesday, which caused the British pound (GBP) to decline while the dollar (USD) soared.

That said, the October consumer price index (CPI) will be released on November 10 and will likely shake the market. Investors from around the world will closely examine it to see how it may affect the Federal Reserve’s interest rate policy.

Meanwhile, Tuesday’s election in the United States could result in the Republicans seizing control of both the House and the Senate. However, the ultimate outcomes might not be seen for several days.

British Pound Drops to Weekly Low on Tuesday as Market Dynamics Shift Grounds

After falling more than 0.5% earlier today, the pound fell another 0.23% to 1.1489 during the morning European trading session. After the government’s failed tax-cutting budget, it fell to a record low of 1.0327 in September, but it has since recovered significantly.

During the decline, the dollar index increased by 0.1% to 110.28. The index dropped significantly in the previous two sessions as a result of Friday’s mixed jobs report, which raised hopes that the Fed could scale down its accelerated interest rate increases.

According to Kamal Sharma, senior currency strategist at Bank of America, the main concern right now is uncertainty over whether the dollar’s massive surge has reached its peak. Sharma stated that he believed the dollar needed to increase more, which would cause the pound to decline.

On Tuesday, the euro (EUR) was marginally higher than the pound at 87.04 pence.

Analysts predicted that the financial report from the British government, which comes next week, could cause volatility in the pound and other British assets. After the market chaos of September and October, the new finance minister, Jeremy Hunt, is anticipated to increase taxes and reduce spending to recover investor trust.