Pound Remains Under Pressure at Start of Q3

2026-07-01 08:58 By Joana Ferreira 1 min. read

The pound opened the third quarter at $1.32, near a seven-month low, after a 1.4% drop against the US dollar in June, driven by political uncertainty, a stronger dollar, and the Bank of England’s dovish stance.

Investors are closely following the ECB’s Sintra Forum for insights into economic outlooks and policy directions.

Bank of England Governor Andrew Bailey stated that the central bank is not rushing to respond to rising oil prices and that inflation is on track to return to the 2% target, though later than desired.

He also forecasted inflation to rise to about 3.2% later this year, up from the current 2.8%.

Meanwhile, the dollar remained supported by expectations of US rate hikes later in 2026.

Elsewhere, investors weighed the likelihood of Energy Secretary Ed Miliband becoming the next Chancellor over centrist Wes Streeting, while concerns about fiscal policy under Andy Burnham, the frontrunner to become the UK's next Prime Minister, eased after he pledged fiscal discipline.



News Stream
Pound Remains Under Pressure at Start of Q3
The pound opened the third quarter at $1.32, near a seven-month low, after a 1.4% drop against the US dollar in June, driven by political uncertainty, a stronger dollar, and the Bank of England’s dovish stance. Investors are closely following the ECB’s Sintra Forum for insights into economic outlooks and policy directions. Bank of England Governor Andrew Bailey stated that the central bank is not rushing to respond to rising oil prices and that inflation is on track to return to the 2% target, though later than desired. He also forecasted inflation to rise to about 3.2% later this year, up from the current 2.8%. Meanwhile, the dollar remained supported by expectations of US rate hikes later in 2026. Elsewhere, investors weighed the likelihood of Energy Secretary Ed Miliband becoming the next Chancellor over centrist Wes Streeting, while concerns about fiscal policy under Andy Burnham, the frontrunner to become the UK's next Prime Minister, eased after he pledged fiscal discipline.
2026-07-01
Pound Near Seven-Month Low as Political Uncertainty Weighs
The pound traded around $1.32, close to a seven-month low, as investors remained cautious while awaiting news on the new Treasury leader to replace Rachel Reeves. Andy Burnham, the frontrunner to succeed UK Prime Minister Keir Starmer, who announced his resignation last week, pledged fiscal discipline on Monday. He also vowed to devolve fiscal powers from Westminster to local authorities if elected but offered no further details or potential ministerial appointments, stating he would announce them only after the Labour leadership contest concludes. Sterling was on track for a monthly decline of over 1.5% against the USD, pressured by political uncertainty, a stronger dollar, and shifting rate expectations following the US-Iran ceasefire. With the Strait of Hormuz reopened, oil prices and inflation forecasts have fallen, reducing bets on Bank of England rate hikes, while the US Federal Reserve’s hawkish stance continues to support expectations of US rate increases.
2026-06-30
Sterling Rises as Burnham Pledges to Stick to Fiscal Rules
The pound remained above $1.32, recovering from a recent seven-month low, after Andy Burnham, the sole candidate to succeed Keir Starmer, has vowed to significantly devolve fiscal powers from Westminster to local authorities if elected, while maintaining fiscal discipline. In his first major speech after winning a Commons seat, Burnham criticized the UK’s "stark imbalance" between national and local government resources, calling it a barrier to growth. Still, he refused to disclose potential ministerial appointments, stating he would announce them only after the Labour leadership contest concludes. Sterling remains down over 1.5% this month against the USD, pressured by political uncertainty, a stronger dollar, and shifting rate expectations after the US-Iran ceasefire. With the Strait of Hormuz reopened, oil prices and inflation forecasts have fallen, reducing bets on Bank of England hikes, while the US Federal Reserve's hawkish stance supports US rate increase expectations.
2026-06-29