• The Pound Sterling rebounds strongly against the US Dollar, which corrects after Wednesday’s rally.
• The US Dollar should remain well-supported by Trump’s victory in the US presidential election.
• Investors await the Fed and the BoE’s monetary policy decisions, with markets expecting both central banks to cut interest rates by 25 bps.

The Pound Sterling (GBP) bounces sharply to near 1.2935 against the US Dollar (USD) in Thursday’s London session after refreshing an almost 11-week low near 1.2830 on Wednesday. The GBP/USD pair rebounds as the US Dollar (USD) corrects slightly after a sharp rally. The US Dollar Index (DXY), which gauges Greenback’s value against six major currencies, drops to near 104.90 after posting a fresh four-month high around 105.40.

The US Dollar had a strong run-up on Wednesday due to a landslide victory of Republican candidate Donald Trump over his Democratic rival Kamala Harris. The appeal of the Greenback improved sharply as Trump has vowed to raise tariffs on imports by 10% universally and lower corporate taxes if he wins the presidential elections, measures that traders interpreted as a positive for the US Dollar.

Higher tariffs could push demand for domestic output, while corporate lower taxes would leave more money in the hands of corporations, which will boost investments. A scenario that will result in higher investments, spending and labor demand will escalate price pressures and allow the Federal Reserve (Fed) to take a hawkish stance on interest rates.