16 September highs: British Pound rallies as election results send USD tumbling

A widespread USD sell-off drives a sharp GBP/USD advance on Wednesday.
A one-month low for the USD follows falling US bond yields and hopes of diplomacy with Iran.
Expectations of a BoE rate increase support the GBP, reinforcing the strong rally.

GBP/USD surges beyond the mid-1.3400s. Heavy buying during Wednesday’s Asian session has lifted the pair to its highest level since September 16 in the past hour, with broad US Dollar (USD) weakness driving the advance.

Early US midterm election counts indicated a growing likelihood of a Democratic victory, sending the USD Index (DXY) to its lowest level in over a month. The index measures the Greenback against a basket of currencies. The prospect of political gridlock in Washington has encouraged safe-haven demand for US Treasuries, pushing bond yields down. Optimism about diplomacy with Iran is also weighing on demand for the safe-haven dollar. Together, these factors are giving GBP/USD a substantial lift.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

Speaking to the Financial Times on Tuesday, President Donald Trump said the US had no immediate plans to strike Iran. His comments raised hopes of a diplomatic settlement to end the US-Iran war, leading traders to remove the geopolitical risk premium from prices. Meanwhile, the British Pound (GBP) remains a relative outperformer. Recent UK budget updates have eased fiscal concerns, while expectations of an interest rate increase at Thursday’s Bank of England (BoE) policy meeting have strengthened.

September job openings increased to 7.5 million from 7.2 million, exceeding expectations, according to the Labor Department’s monthly Job Openings and Labor Turnover Survey (JOLTS). Hiring remained relatively stable. Alongside inflation risks from high energy prices, the figures support the prospect of additional policy tightening by the Federal Reserve (Fed). Even so, dollar bulls have found no relief, suggesting GBP/USD’s path of least resistance remains higher.

For near-term direction, traders will turn to the US ADP private-sector employment report and ISM Services PMI later in the North American session. The main events remain Thursday’s BoE policy announcement and Friday’s closely watched monthly US employment release, commonly called the Nonfarm Payrolls (NFP) report. With fundamentals still supportive, any corrective GBP/USD decline is more likely to attract buyers.

GBP/USD: daily price chart

Near-Term Technical Outlook

A break above the 200-day Simple Moving Average (SMA) at 1.3424 during the session keeps GBP/USD’s near-term outlook bullish. The pair is also trading just above 1.3467, the 61.8% Fibonacci retracement. Having recovered the midpoint of the recent decline, buyers appear to be defending this pivotal area.

The next upside barrier is 1.3556, the 78.6% Fibonacci retracement, followed by the recent cycle peak of 1.3670. Initial downside support lies around the 200-day SMA at 1.3424, then the 50.0% retracement at 1.3404. Further buying interest emerges at 1.3341, the 38.2% level, and at 1.3264, the 23.6% retracement, before the structural floor around 1.3138.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

US Dollar Performance Today

Among the major currencies listed below, the US Dollar (USD) performed best against the New Zealand Dollar today. The table sets out its percentage moves against each currency.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		-0.43%	-0.37%	-0.68%	-0.30%	-0.12%	0.11%	-0.71%
EUR	0.43%		0.06%	-0.25%	0.11%	0.29%	0.52%	-0.29%
GBP	0.37%	-0.06%		-0.30%	0.08%	0.25%	0.47%	-0.35%
JPY	0.68%	0.25%	0.30%		0.39%	0.57%	0.78%	-0.04%
CAD	0.30%	-0.11%	-0.08%	-0.39%		0.17%	0.39%	-0.43%
AUD	0.12%	-0.29%	-0.25%	-0.57%	-0.17%		0.22%	-0.60%
NZD	-0.11%	-0.52%	-0.47%	-0.78%	-0.39%	-0.22%		-0.81%
CHF	0.71%	0.29%	0.35%	0.04%	0.43%	0.60%	0.81%

Percentage movements between major currencies are displayed in the heat map. Select the base currency in the left-hand column and the quote currency in the top row. Selecting the US Dollar on the left and following its row across to the Japanese Yen, for instance, gives the percentage change for USD (base)/JPY (quote) in the corresponding cell.