Pound Hits Seven-Week High Near $1.35 as Dollar Slips; Bank of England Expected to Raise Rates Thursday

The British pound climbed to a seven-week high against the U.S. dollar on Wednesday, Nov. 4, 2026, as the dollar weakened after Democrats won control of Congress and traders positioned for a Bank of England decision on Thursday that is widely expected to deliver the central bank's first interest rate increase since August 2023.

Where sterling and the euro traded

Sterling touched $1.3503 during the session, its highest level in seven weeks, before slipping back below $1.35, FXStreet reported. As of about 12:09 p.m. ET, the pound was at $1.3468, up 0.43% on the day, according to Yahoo Finance data. Earlier, at 5:25 a.m. ET, it had been up 0.60% at $1.3495, Investing.com reported.

The euro was at $1.1233 at midday, up 0.37%, after reaching about $1.1275 earlier, and the euro was flat against the pound at about 0.8339 pounds, Yahoo Finance data show. The U.S. Dollar Index, which measures the greenback against six major currencies, was down about 0.26% at 101.61 shortly before noon ET after dipping as low as about 101.10. The dollar was down 0.17% against the yen at about 158.35 yen.

Chris Turner, global head of markets at ING, said a Democratic Congress would be "a mild dollar negative," citing implications for AI spending and the risk of a prolonged government shutdown next summer, according to Investing.com. "We would not chase the dollar lower today for what, after all, could be a 2027 story," Turner said, noting that the new Congress does not take office until January.

What the BoE is expected to do

Economists polled by Reuters expect the Bank of England to raise Bank Rate to 4.0% from 3.75%, Reuters reported. The poll pointed to a 7-2 vote, with external members Alan Taylor and Swati Dhingra seen as the most likely to vote to keep rates unchanged. The Monetary Policy Committee voted 6-3 to hold rates in September, with Chief Economist Huw Pill and external members Catherine Mann and Megan Greene favoring a hike.

The pressure comes from inflation. U.K. consumer prices rose 3.5% in the year to September, compared with the BoE's July forecast of 3.0%, as energy costs climbed during the Iran war, Reuters said. Governor Andrew Bailey has said the bank cannot wait for conclusive proof of second-round effects, in which higher inflation feeds into wage and price setting.

Money markets have fully priced in Thursday's increase, while the chance of another hike in December stood at 26%, FXStreet reported, citing Prime Terminal. A separate FXStreet analysis said money markets price four quarter-point hikes by September 2027, including Thursday's, which would take Bank Rate to 4.75%, according to LSEG data. It said 27 of 30 research houses expect a hike on Thursday, with most expecting one more in February and a stop at 4.25%, while Nomura expects another 6-3 vote.

Guidance in focus

Analysts said the pound's reaction may depend more on the vote split and guidance than on the decision itself. Matthew Ryan, global head of market strategy at Ebury, wrote in a note published by FXStreet that a 6-3 vote, hikes made conditional on second-round effects or any pushback on market pricing would likely send sterling lower, while an 8-1 or unanimous vote with hawkish language would support it.

MUFG Research also forecast a 7-2 vote for a hike to 4.00% and said it expects another quarter-point increase in February to 4.25%, which it sees as the peak. MUFG said it expects the BoE to revise its forecast for peak inflation to 4.75%, up from "slightly above 4%," partly because of an expected 25% to 30% rise in the Ofgem energy price cap in January.

The decision, meeting minutes and the Monetary Policy Report are due at 12:00 GMT on Thursday, which is 7:00 a.m. ET, with a press conference with Bailey to follow at 12:30 GMT.

Eurozone inflation in line

On the euro side, preliminary Eurostat data released Wednesday showed eurozone inflation rose to 4% in October from 3.8% in September, as energy costs climbed 20.8% from a year earlier, in line with forecasts, according to Investing.com. Core inflation held at 2.5%, and services inflation was 3.3%. Turner said EUR/USD was "correcting off an overnight spike to 1.1260" and that ING sees the 1.1260 to 1.1270 area as the top of a near-term trading range.

U.S. data on Wednesday showed private employers added 86,000 jobs in October, according to ADP, while the ISM services index fell to 54.5 from 54.9, below the 54.8 forecast cited by FXStreet. The U.S. October employment report is due Friday.

Sources: FXStreet, Investing.com, Reuters (via Investing.com), Ebury (via FXStreet) and MUFG Research, Nov. 2-4, 2026; Yahoo Finance market data as of about 12:09 p.m. ET.