"Sterling weakness is no longer abstract. In recent sessions, the pound has slipped to multi-week lows against both major counterparts, trading around $1.35-$1.36 versus the dollar and €1.14-€1.15 against the euro, after earlier strength faded. Against the euro, sterling has fallen more than 0.5% in a single session."
"The immediate trigger was monetary. The Bank of England's decision last week to hold interest rates at 3.75% was decided by a 5-4 vote, prompting traders to bring forward expectations for rate cuts later this year. UK front-end yields fell sharply, removing one of the pound's remaining supports."
"Nigel Green says markets have responded to events rather than speculation. "Currency markets are reacting directly to Keir Starmer's leadership being tested," he notes. "The Prime Minister has lost a Chief of Staff in the middle of a political crisis tied to a controversial appointment, investors are reassessing risk in real-time. Sterling reflects that reassessment.""
Sterling has weakened to multi-week lows, trading around $1.35–$1.36 and €1.14–€1.15, with a single-session drop of more than 0.5% versus the euro. The Bank of England held interest rates at 3.75% in a 5-4 vote, prompting traders to bring forward expectations for rate cuts and driving down UK front-end yields. Political developments intensified selling after Peter Mandelson's appointment to Washington reignited scrutiny over his Jeffrey Epstein association and prompted Morgan McSweeney's resignation as the prime minister's chief of staff. Markets reassessed risk in real time, leaving political risk embedded in sterling pricing and increasing pound vulnerability.
Read at London Business News | Londonlovesbusiness.com
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