Sterling enjoys World Cup pre-match boost

Matthew Ryan, CFA Ebury

Sterling is trading back above 1.34 against the dollar this morning, extending gains after Tuesday's softer-than-expected US CPI print. Aside from tonight's World Cup semi-final, all eyes in the UK remain fixed on Andy Burnham, who is set to be sworn in as Keir Starmer's successor as prime minister next Monday, 20th July. We expect UK assets to stay relatively quiet until then, with investors waiting on clarity around Burnham's fiscal agenda - chiefly his choice of chancellor.

The last 24 hours have brought an unexpected shift in that regard, with Yvette Cooper and Shabana Mahmood emerging as to the two favourites for the job amid reports that advisors are steering Burnham away from handing the role to former Labour leader Ed Miliband.

For markets, a move away from Miliband as chancellor is likely to be seen as modestly supportive given his preference for greater fiscal expansion, though market participants will await official confirmation before overcommitting.

Author

Matthew Ryan, CFA

Ebury

Matthew is Global Head of Market Strategy at FX specialist Ebury, where he has been part of the strategy team since 2014. He provides fundamental FX analysis for a wide range of G10 and emerging market currencies.

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