Unstable Government
GBP: The British Pound has continued to weaken amid intensifying British political uncertainty, including leadership speculation, senior Number 10 departures and upcoming electoral risks, leaving a political risk premium attached. The Bank of England’s increasingly dovish stance has signalled to potential interest rate cuts which has added further pressure. Although temporary political support has offered momentary stability, ultimately lingering concerns over leadership and economic momentum continue to dominate sentiment.
EUR: The Euro traded in a narrow range amid limited Eurozone data and subdued market momentum. It found modest support from Dollar softness, though gains were constrained by the lack of clear directional drivers. Attention is turning to upcoming European Central Bank speeches, where any divergence in tone on inflation or policy could influence sentiment and inject short-term volatility into the single currency.
USD: The US Dollar has struggled for sustained direction, finding only modest support despite a broader rebound in US assets. Weaker than expected retail sales have raised concerns about the resilience of consumer spending and reinforced expectations that the Federal Reserve may cut interest rates later this year. Upcoming labour market data could drive near-term volatility, particularly if job creation disappoints.
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