Sterling steady as traders await BoE, nervously watch midterms

Sterling held steady against both the US dollar and the euro on Tuesday, 3 November 2026. Reuters reported that traders were wary of placing large bets before the US midterm elections. They were also adjusting positions ahead of the Bank of England's policy meeting on Thursday.

The pound was flat against the dollar at $1.3414. Against the euro it was a fraction firmer on the day at 83.35 pence per euro. That level is close to an 18-month high reached the previous week, when a lower pence-per-euro figure means a stronger pound.

Reuters said the midterms arrive at a tense time for markets. A slump in AI-related shares has caused investor unease. Traders are also watching the situation in the Gulf, where a senior Iranian official told Reuters that Iran and the US remain far from a deal to end the war. According to the report, that uncertainty kept market moves in check.

The main domestic event for British markets this week is the Bank of England meeting. The central bank's Monetary Policy Committee is expected to raise interest rates for the first time since August 2023. Markets are pricing three further BoE rate rises next year, on top of a move this week. Many analysts think that pricing is overdone.

The report quoted strategists on how the meeting might play out. One said the BoE is likely to push back against the market pricing instead of validating it. The same strategist thinks the European Central Bank is likely to raise rates by less than markets currently price. Another analyst, Henry Cook at MUFG, was quoted as saying UK inflation, already at 3.5%, is heading materially higher. He also said the economy has outperformed expectations and the labour market seems to have stabilised. Cook expects just one more hike, in February.

On positioning, the report said BMO is cautious on the pound against the dollar. It still wants to sell the euro against the pound. It cited French political risk and weaker euro-area growth, which it expects to reassert themselves.

The wider currency backdrop was calm. A separate Reuters report on Tuesday's dollar trading said the dollar index edged up 0.07% to 101.83. The euro was up 0.07% at $1.1193, and sterling was up 0.11% at $1.3418. The Japanese yen weakened 0.47% against the dollar to 158.66 per dollar. The dollar moved between small gains and losses as investors weighed uncertainty over a possible US-Iran deal and the midterms.

A Reuters poll of foreign-exchange strategists, conducted from 30 October to 3 November, also looked ahead to the elections. The median forecast from 66 strategists put the euro at about $1.13 in three months and $1.16 in a year, from around $1.12 now. About 60% of those who answered an extra question said the dollar was more likely to top their three-month forecasts than to fall short.

The pound's flat reading reflects a market waiting for event risk. The US election outcome and the BoE's rate decision and guidance are both due within days. Currency moves around such events can be sharp in either direction, and nothing in the report establishes where sterling will go next. This article is a factual summary of market reporting and is not investment advice.

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