Pound Falls As European Shares Traded Lower

(RTTNews) - The British pound weakened against other major currencies in the European session on Friday, as European shares fell sharply on Friday as the Democratic Party's sweeping wins at this week's midterm elections in the U.S. sparked fears of a slowdown in the pace of AI infrastructure development.

Markets also worried about the monthly payrolls data from the U.S. due on Friday morning. Markets expect the U.S. economy to have added 65 thousand jobs in October.

In economic news, data published by Lloyds Banking Group showed that the UK house prices declined for the third straight month in October, marking their quickest in three years. House prices dropped 1.2 percent on an annual basis in October, faster than the 0.1 percent slight decrease in September. That was faster than the 0.3 percent decline expected by economists. Moreover, this was the steepest decrease since October 2023.

On a monthly basis, house prices dropped 0.6 percent, following a 0.1 percent fall in the prior month. Meanwhile, economists had expected an increase of 0.1 percent.

Thursday, investors applauded the UK's push for stronger connections with Europe, the pound reached its highest level since it crashed following the Brexit referendum ten years ago.

The pound hit its highest level versus a basket of other currencies since Wednesday, June 23, 2016, the day of the EU vote, according to data issued by the Bank of England on Thursday.

The Bank of England (BoE) in the UK raised interest rates for the first time in over three years, meeting investor expectations and raising the Bank Rate to 4 percent. Beyond that, some policymakers hinted at future monetary tightening; Governor Andrew Bailey agreed at the news conference that followed.

In the European trading today, the pound fell to a 3-day low of 1.0944 against the Swiss franc, from an early high of 1.0993. The pound may test support around the 1.07 region.

Against the U.S. dollar and the yen, the pound dropped to 4-day lows of 1.3394 and 211.31 from early highs of 1.3464 and 212.46, respectively. If the pound extends its downtrend, it is likely to find support around 1.32 against the greenback and 210.00 against the yen.

The pound edged down to 0.8353 against the euro, from an early high of 0.8334. On the downside, 0.84 is seen as the next support level for the pound.

Looking ahead, U.S. and Canada jobs data for October, Canada Ivey PMI for October, U.S. Michigan consumer sentiment for November, U.S. Baker Hughes oil rig count data and U.S. consumer credit for September are due to be released in the New York session.