Sterling reacted positively to the first major policy speech by Andy Burnham since Sir Keir Starmer announced his resignation as prime minister. The pound strengthened against the US dollar and the euro yesterday amid an otherwise light economic schedule.
The general sense in the City and beyond was that Burnham’s vision was positive but realistic, laying out plans for a greater devolution of powers and growth in every postcode. Crucially, he included sound finances within his definition of “Manchesterism”, prompting borrowing costs to dip in the minutes after his address.
Burnham’s speech lacked much in the way of fleshed out details, but if this was a flavour of what he will bring to Downing Street, there was promise in his ability to offer carrots to disparate interest groups such business – including lower rates for pubs and hospitality – investors and progressives, and with the Treasury’s power potentially diminished by the creation of ‘Number 10 North’.
European policymakers are in the picturesque Portuguese holiday town Sintra this week for their annual conference (you can snoop on some lovely local properties here, courtesy of our friends at Your Overseas Home). The presence of the Federal Reserve’s Kevin Warsh has added some spice to proceedings. Both he and the European Central Bank’s Christine Lagarde are due to give speeches in the coming days that are likely to influence the euro and dollar’s direction.
For those trying to sell a house in the UK there was more disappointment in the mortgage data yesterday, with new approvals in May hitting their lowest since 2023 as buyers continued to worry about potentially rising interest rates.
Representatives from the United States and Iran will meet today in Doha with the aim of hammering out a deal to fully reopen the Strait of Hormuz. Tensions cooled a bit after tit-for-tat strikes over the weekend, but a number of roadblocks to an effective peace clearly remain.
Looking away from our core currencies, the Japanese yen slumped to within touching distance of its lowest in 40 years against the US dollar. This historic weakness is being driven by the significant difference in interest rates, as well as there being more than a month until the Bank of Japan’s next meeting.
GBP: A good audition
Sterling markets have been quick to view Andy Burnham as the heir apparent to Number 10. By all accounts, they were impressed by his first appearance in a prime ministerial context. Both investors and Burnham himself will know that tougher challenges lie ahead.GBP/USD: the past year
EUR: Big day for data
French inflation data for June came out this morning before Italy and Germany are due to follow suit across the day. These figures will be closely watched alongside the ECB’s get-together in Sintra and could lead to some quick movements for the euro this afternoon.GBP/EUR: the past year
USD: Which way will Warsh lean?
Kevin Warsh’s comments at his debut press conference as Fed chair helped the US dollar rally. Doubling down on those hawkish instincts could well lead to more USD strength, but if he rows them back, even slightly, we might be in for a quick reversal of last week’s trend.USD/GBP: the past year
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