The pound sterling received buying support against the dollar during Thursday's Asian trading session, rising to around 1.3485. The Democratic Party's overwhelming victory in both the House and Senate in the US midterm elections, securing a major victory in several traditionally Republican strongholds and eliminating the risk of election disputes, led to a sell-off of the dollar, providing external support for the pound sterling. Market focus is on the Bank of England's interest rate decision on Thursday evening, with widespread expectations that the Bank of England will raise interest rates for the first time in three years, increasing the benchmark rate from 3.75% to 4.0%. Traders will closely watch the press conference of Bank of England Governor Bailey for clues about the future path of UK interest rates. Financial markets are pricing in at least 75 basis points of further rate hikes next year, in addition to this one, with UK interest rates potentially exceeding US expectations. Analysts suggest that rising energy prices in recent months, coupled with the recent resilience of the UK economy, have prompted the Monetary Policy Committee to favor rate hikes. Societe Generale points out that the pound has broken above the 200-day moving average against the dollar, reaching a seven-week high, up 2.7% from its mid-October lows. This rally is driven by the concentrated covering of short positions accumulated before the budget announcement. A stronger pound will also indirectly help the Bank of England curb domestic inflation. Overnight, the pound/dollar pair fluctuated between 1.3408 and 1.3484, with key support at 1.3390 and resistance at 1.3535. In the options market, there are large option positions at 1.3365 and 1.3450. The UK 10-year IRS rate declined slightly, and the 2037 green bond auction saw good subscription multiples, indicating a stable bond market. However, the Federal Reserve remains a constraint. Fed official Logan's speech was strongly hawkish, receiving a rating above the historical average. He emphasized that the Fed needs at least two more 25-basis-point rate hikes, and skipping the meeting would not change the policy endpoint. Even with a strong economy, policy will be pushed to a moderately restrictive level. The FXS Fed Sentiment Index rose further, maintaining a high hawkish range, supporting the dollar and limiting the pound's upside. On the daily chart, the pound/dollar pair maintains a short-term bullish pattern, with the price holding above the 100-day simple moving average and the Bollinger Band middle line, trading in the upper half of the Bollinger Bands. The 14-period RSI reading is 65.3, indicating strong bullish momentum, but it is approaching overbought territory, meaning that while upward momentum remains, it is likely to weaken soon. The immediate resistance is at the upper Bollinger Band at 1.3505; a decisive break above this level would open up further upside potential. Initial support lies at the 100-day moving average at 1.3390, followed by the middle Bollinger Band at 1.3345. If this upward move experiences a significant pullback, the lower Bollinger Band at 1.3185 will become a key target for short positions. On the 4-hour chart, moving averages are in a bullish alignment, prices are rising steadily, and indicators are approaching overbought territory. Short-term momentum is strong, but given the proximity to resistance, caution is advised regarding the risk of a pullback after a surge. The core driver of the market movement is the Bank of England's policy decision; volatility is expected to increase significantly before and after the decision. Editor's Summary: The pound surged against the dollar due to a weakening dollar and expectations of a Bank of England rate hike, with short covering pushing the exchange rate above key moving averages. However, the Federal Reserve's hawkish policy stance provides underlying support for the dollar, so blindly chasing the rally is not advisable. The short-term risk lies in the Bank of England releasing dovish signals, leading to a "buy the rumor, sell the fact" scenario and a pullback in the pound. A potential opportunity is for the Bank of England to signal continued tightening, pushing the exchange rate above resistance. Pay close attention to the breakout from the 1.3390-1.3505 range.