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The US midterms could have an unexpectedly large impact on British industry.
Last updated: 20 October 2026
On 3 November, the United States will go to the polls to elect 35 senators, 36 governors and the entirety of the House of Representatives.
These midterm elections have been full of rancour and controversy. They are also set to attract the highest amount of political spending of any non-presidential election cycle, underscoring the significance of the battles playing out across the country.
Whatever the outcome, these midterms are sure to have a significant bearing on the UK business landscape. Remember that you can request a call back from our team to manage the risks to your profit margins and cashflow ahead of the big day.
What do the US midterms mean for UK businesses?
The 2026 US midterm elections could affect UK businesses by changing expectations for American trade policy, government spending and the US dollar. Although the result may not directly determine exchange rates, uncertainty surrounding the election could create additional volatility for companies with dollar-denominated costs, revenues or overseas payments.
How do the midterms work?
Americans will vote to return a third of senators and the entire of House of Representatives to Washington. What appears on the ballot will vary significantly state by state, but this is essentially the equivalent of about 250-300 British MPs facing concurrent by-elections.
These elections are split between the House and the Senate – roughly analogous with the House of Commons and the Lords, although the Senate wields much more power than its UK counterparts. Legislation is agreed first in the House and then in the Senate, with the former given the power to impeach the president and the latter the power to convict. The Senate also has additional powers to confirm presidential nominations (including for the Supreme Court).
Where are the key races?
Control of the Senate hinges on a handful of races in key battlegrounds such as Maine, North Carolina, Michigan and Texas. The Democrats need to finish proceedings with 51 senators, while the Republicans would retain control with just 50 given the vice president’s tie-breaking vote.
Current polling suggests democratic candidates could record shock victories in red states that elected Trump by double-digit majorities in the 2024 election. Places like Ohio and Kansas, which has not failed to elect a Republican senator since the Second World War, now seem genuinely competitive.
However, the shift in support away from the president has been less stark in states traditionally lean democrat. Michigan is the best example of this, with its race for senator effectively neck and neck.
What are the big issues?
The cost of living is undisputedly the big battleground in this election. Part of this is tied up in Trump’s war with Iran, which many blame for pushing gas and diesel prices (a particularly important consideration in rural areas) to record highs.
Although these elections are technically for hundreds of different positions, many people view them as a referendum on the first two years of Trump’s second term. That period has proved highly controversial, with significant tensions over immigration, government debt and spending, military operations, the construction of the White House ball room and the president’s tariff regime.
Local issues have become enmeshed with the broader themes in Trump’s presidency. This is particularly notable in border states with a high percentage of trade to Canada, like Maine and Michigan. Here, Republican strategies are worried that the recent trade war will turn independents away from him.
How would you describe the current state of the American economy? (% of US adult citizens)
Source: YouGov
How will this impact the US dollar?
The US dollar has had a busy start to the quarter. The teetering AI trade, along with shifting interest rate expectations, has caused it to whipsaw against its rivals, and the midterms represent another risk.
The election itself may not cause sizeable US dollar movements. An orderly and decisive result could reassure investors, particularly if it provides greater clarity over the direction of US economic policy. However, Morgan Stanley argued a divided Congress could complicate the president’s legislative agenda, potentially making it harder to push through further changes to taxation, spending and trade policy.
Markets will also be watching for signs of political gridlock. Should the Democrats gain control of either chamber, they would have greater power to scrutinise the administration and obstruct elements of its domestic agenda. That could introduce fresh uncertainty around fiscal policy, although investors might also welcome additional checks on government spending or tariffs.
Much of the anxiety around the midterms stems from the risk that the results are contested. A repeat of the turmoil surrounding the 2020 presidential election, which culminated in the storming of the US Capitol in January 2021, could undermine confidence in American political institutions and unsettle financial markets.
For the dollar, the implications are far from straightforward. Political uncertainty can weigh on a currency, but periods of global financial stress can also increase demand for the dollar as a traditional safe-haven asset. Meanwhile, inflation, Federal Reserve interest rate decisions and the outlook for US economic growth could ultimately prove more influential than the election result itself.
For UK businesses, the concern is not necessarily whether the dollar strengthens or weakens, but how quickly exchange rates could move. Companies importing goods priced in dollars may face rising costs if sterling depreciates, while exporters earning dollar revenues could see the sterling value of those receipts fluctuate. Either scenario can make cashflow forecasting and protecting profit margins more challenging.
GBP/USD: since August
Protecting your business from currency risk
The US midterms are just one of several events that could influence exchange rates over the coming months. For UK businesses with international exposure, the priority should be preparing for a range of possible outcomes rather than attempting to predict the election result.
Smart Currency Business helps companies manage currency risk through tailored hedging strategies, forward contracts and cashflow planning solutions, providing greater visibility over future costs and revenues. Speak to our team to explore how we could help protect your business from unexpected currency movements.
