Pound Sterling (GBP)
UK government bonds sold off sharply, sending long-term borrowing costs to their highest in decades and putting pressure some renewed pressure on the Pound. Additional weakness came from news of upcoming debt sales and caution ahead of a Fitch rating review. Tomorrow’s inflation data will be crucial – if this comes out better than expected then it could potentially improve the Pound’s outlook.
Euro (EUR)
The Euro lost some ground following Ukraine talks in Washington, as markets saw little reason to be more optimistic about peace. While other European currencies held steady, the Euro’s weakness appears more tied to market positioning than underlying factors. With US events in focus, there is still scope for the Euro to potentially recover later this week.
U.S. Dollar (USD)
The Washington summit confirmed US willingness to provide Ukraine with security guarantees, raising hopes for direct talks with Russia in the coming weeks. The Dollar held firm as investors waited for clearer signs of progress towards peace. For now, attention has turned back to the Federal Reserve, with markets expecting a possible rate cut in September, although recent inflation data has added some uncertainty.