British Pound: Political uncertainty pressures Sterling and gilts – MUFG

FXStreet Insights Team FXStreet

MUFG’s Lee Hardman expects the British Pound (GBP) to stay on a softer footing as UK political uncertainty rises. He links intensified selling in gilts and the Pound to Andy Burnham’s move to enter Parliament and potentially challenge Prime Minister Keir Starmer, alongside concerns over a leftward policy shift, higher borrowing plans, and inflation risks from the energy price shock.

UK politics seen as headwind for Pound

"In contrast to the US dollar, the pound is expected to remain on a softer footing in the week ahead reflecting heightened political uncertainty in the UK, and fears that the Labour party will shift to the left under new leadership."

"It has been reported that he has called for GBP40 billion of additional government borrowing to fund long-term capital spending."

"The unfavourable domestic political developments come at a challenging time for the gilt market which is also facing the risk of much higher inflation from the energy price shock."

"We continue to hold a short GBP/CHF trade idea in the near-term."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

GBP/USD trades near three-month top as fading Fed hike bets undermine USD

The GBP/USD pair attracts some dip-buyers at the start of a new week, and climbs above mid-1.3500s during the Asian session, closer to over a three-month high touched on Friday. Moreover, the prevalent US Dollar selling bias favors bullish traders and suggests that the path of least resistance for spot prices remains to the upside.

EUR/USD strengthens above 1.1550 as Fed rate hike bets fade

The EUR/USD pair gathers strength to around 1.1575 during the early Asian trading hours. The US Dollar edges lower against the Euro amid weaker-than-expected US economic data and shifting central bank expectations. Traders will take more cues from the speech of the European Central Bank President Christine Lagarde on Wednesday.

Gold remains close to June 5 high as receding Fed hike bets undermine USD

Gold builds on Friday's bounce from the $4,300 neighborhood, or a one-week low, and gains some follow-through positive traction at the start of a new week. The commodity, however, struggles to capitalize on the momentum beyond the $4,400 mark and remains below its highest level since June 5, touched on Friday, amid mixed fundamental cues.

Cardano: Whale selling, weak momentum put ADA at risk

Cardano (ADA) nears key support zone, trading at $0.177 after correcting over 10% the previous week. The price decline is supported by whale wallet offloading ADA tokens. Meanwhile, weakening momentum indicators and bearish derivatives metrics suggest a cautious tone among traders and hint at further losses if ADA slips below key support.

US Dollar Weekly Forecast: Economic cracks challenge Fed rate bets

It was a strange week for the US Dollar: while the geopolitical situation has remained largely unchanged, with the usual back-and-forth between the US, Iran, and occasional third parties, disappointing domestic data have re-emerged, reducing expectations of potential tightening by the Federal Reserve in the next few months.

Why is Crude Oil priced for a reopening the ships haven't made?

Fourteen vessels crossed the Strait of Hormuz on Tuesday. Before the war, the count ran near 120 a day. In the sessions since the waterway was publicly declared open, Brent has drifted back to $87 and West Texas Intermediate (WTI) to $81, both a little lower again on Wednesday, with daily momentum on each unwound from the top of its range in late July to the low twenties now.