The pound traded near $1.32, hovering close to a seven‑month low, as investors remained cautious while awaiting the appointment of a new Chancellor to replace Rachel Reeves. Andy Burnham, the frontrunner to succeed UK Prime Minister Keir Starmer—who announced his resignation last week—pledged on Monday to maintain fiscal discipline. He also vowed to devolve greater fiscal powers from Westminster to local authorities if elected, but provided no further details or indications of potential ministerial appointments, saying he would not make such announcements until after the Labour leadership contest concludes.
Sterling was on course for a monthly loss of more than 1.5% against the US dollar, weighed down by political uncertainty, dollar strength, and shifting interest rate expectations following the US‑Iran ceasefire. With traffic through the Strait of Hormuz resuming, oil prices and inflation forecasts have eased, reducing market bets on further Bank of England rate hikes. In contrast, the US Federal Reserve’s hawkish stance continues to underpin expectations of additional US rate increases.
