GBPUSD rallies to levels near 1.1600 as the US dollar dives

• The pound shrugs off previous weakness and jumps to session highs near 1.1600.
• US dollar dives, stock markets advance as the Americans go to the polls.
• Investors welcome the first surveys hinting at a Republican victory.

The pound rushed higher during Tuesday’s US session, bouncing off the 1.1470 area to erase daily losses and session highs right below 1.1600 as the Americans head to the polls.

US stocks advance and the dollar dives with all eyes on the elections

The greenback has dropped across the board in the US trading session, with US Treasury bond yields losing ground and Wall Street posting gains, with all eyes on the outcome of the US mid-term elections.

A hitherto rangebound market has led to a significative US dollar pullback as the first surveys started hinting at a Republican victory. This scenario might create a gridlock in the US Congress that would be welcomed by the market as it will hinder the approval of new regulations.

US stock indexes have extended gains after a mixed market opening. The Dow Jones advances 1.6%, while the S&P500 and the Nasdaq Indexes are 1.5% and 1.2% up respectively at the time of writing.

The US Dollar Index, which measures the value of the USD against a basket of the most traded currencies has turned negative on the daily chart, dropping from the 110.30/40 area to six-week lows at the lower range of the 109s.

Technical levels to watch