The pound ended Monday close to its best level since the end of March against the US dollar and the euro, despite widespread uncertainty over the energy crisis and its impact on the economy. Iran did strike a more constructive tone over the vital Strait of Hormuz, but only after planned talks with the United States stalled over the weekend.
While Brent crude futures neared $110 per barrel to start the week, almost double January’s price, the Iranian regime indicated it was willing to negotiate on the issue of trade. That may prove a non-starter for the United States should the question of nuclear disarmament be off the table. Recent tit-for-tat shipping seizures in the Strait certainly indicate a diplomatic solutions is a way off.
In a week in which every G7 central bank will announce interest rate decisions, policymakers have the chance to set the direction for their respective currencies. However, the expectation is for all of them to leave rates on hold.
The Bank of Japan was first up, announcing a hold at 0.75% overnight. The Federal Reserve and the Bank of Canada follow tomorrow, before the Bank of England and the European Central Bank are lined up for Thursday.
Monday’s trading was a little curious, as pretty much every major currency looked weak for one reason or another. Sterling strengthened by a little against the US dollar but was knocked back by the Japanese yen, which was itself a little soft ahead of the BoJ’s decision.
MPs will today debate if Sir Keir Starmer’s decision to appoint Peter Mandelson as ambassador to the United States should be the subject of a formal inquiry. The vote could be a test of the prime minister’s support after the messy affair dominated headlines last week.
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