The British pound erased its early gains to trade below $1.34, its lowest level in a week, as investors continued to assess the UK's evolving political landscape. Newly appointed Prime Minister Andy Burnham, who took office on Monday, unexpectedly named former Defence Secretary John Healey as chancellor. Healey was not considered a frontrunner for the role, but his appointment has fueled expectations of higher defence spending. Seeking to reassure markets, Burnham and Healey emphasized their commitment to maintaining fiscal discipline, after the prime minister appeared to step back from plans to raise the personal income tax allowance. On the economic front, data from the ONS showed UK public sector borrowing totaled £16 billion in June, around one-third lower than a year earlier and below market expectations. Investors also kept a close eye on developments in the Middle East and the subsequent rise in oil prices.

The yield on the US 10-year Treasury note rose for a second consecutive session to 4.62% on Tuesday, its highest level since mid-May, as investors continued to assess developments in the Middle East and the renewed surge in oil prices. Inflation concerns have resurfaced as tensions between the US and Iran continue to escalate, with the two countries exchanging strikes for a tenth consecutive day. On the monetary policy front, Fed Chair Warsh has repeatedly stressed that inflation remains a key concern for the central bank, a message that has been echoed by several other Fed officials in recent weeks. Policymakers have now entered their customary blackout period ahead of next week's FOMC meeting in which the central bank is widely expected to leave the federal funds rate unchanged. However, expectations for tighter policy remain elevated beyond July, with traders assigning roughly a 68% chance of a rate increase at the September meeting.

Crude oil climbed more than 2% to around $84.5 per barrel, the highest since June 12, extending gains for a third straight session as supply concerns intensified across several key export routes. Markets continued to monitor the conflict between the US and Iran after Washington carried out a 10th consecutive day of strikes and President Trump vowed Tehran "will pay" for attacks that killed American soldiers. Another tanker carrying oil products was reportedly struck near the Strait of Hormuz, highlighting ongoing risks to shipping. Meanwhile, Yemen's Houthi militants threatened to block Saudi maritime traffic in the Red Sea, prompting at least one Saudi crude tanker to reverse course. Beyond the Middle East, attacks on the Caspian Pipeline Consortium terminal on Russia's Black Sea coast also disrupted exports from Kazakhstan, one of the world's largest crude suppliers. Saudi Arabia said it would take all necessary measures to safeguard its vessels in accordance with international law.

Germany's ZEW Indicator of Economic Sentiment rose 15.8 points to 26.3 in July 2026, following a 20.7-point jump in June and comfortably beating market expectations of 18. The reading marked the highest level since February, before the Middle East conflict weighed on global confidence, suggesting that Germany's reform package is beginning to support the economic outlook. The improvement was driven by stronger expectations for export-oriented industries and resilient domestic demand, although the conflict in Iran and elevated oil prices remain key risks to the recovery. Most sectors posted gains in July, led by mechanical engineering (+14.5 points) and private consumption (+14.7 points). The construction sector also improved by 12.7 points, approaching neutral territory. Meanwhile, the chemical, pharmaceutical, and metal industries remained in negative territory despite modest gains, while the automotive sector weakened sharply, with its sentiment balance falling 11.3 points to -46.6.

Spain’s trade deficit widened to €8.245 billion in May 2026, which was €5.702 billion higher than in the same month of 2025. This increase was mainly caused by a sharp rise in energy imports. Total imports grew by 14.4% to €42.939 billion, while exports fell slightly by 0.9% to €34.694 billion. The cost of imported oil almost doubled because the closure of the Strait of Hormuz disrupted global crude oil transport. During the first five months of 2026, the country's trade deficit reached €25.094 billion, up 16.6% compared with the previous year. Although exports increased by 1.3%, imports rose faster, by 3.1%, largely due to higher energy costs. Despite the overall deficit, sectors such as food, beverages and tobacco recorded strong trade surpluses. Spain also maintained a growing trade surplus with the European Union, especially with France, Portugal, and the United Kingdom, which remained key export markets.

Switzerland’s trade surplus narrowed to CHF 3.8 billion in June 2026 from a downwardly revised CHF 5.5 billion in the previous month. Exports fell 4.3% year-on-year to CHF 24.3 billion, weighed down by lower sales of chemical and pharmaceutical products (-8.5%), machinery, electronics, and appliances (-0.3%), electricity (-6.9%), and textiles, clothing, and footwear (-1.6%). Exports to Europe declined 9.4%, with notable decreases in shipments to Slovenia (-27.8%), Belgium (-20.7%), and France (-5.1%), while exports to North America rose 9.2%, led by Canada (+18.4%) and the US (+8.6%). Meanwhile, imports increased 3.3% to CHF 20.5 billion, driven largely by higher purchases of chemical and pharmaceutical products (+10.7%), energy carriers (+1.3%), and paper and cardboard products (+2.0%). By region, imports from Asia rose 7.3%, supported by stronger inflows from the UAE (+32.5%), Hong Kong (+13.1%), Saudi Arabia (+36.9%), and Singapore (+15.1%).