GBP/USD rose 0.24% to 1.3235 as Labour leadership frontrunner Andy Burnham outlined his comprehensive 'good growth' vision for Britain in his first major policy speech since returning to Westminster politics. According to Business Standard, Burnham, speaking at People's History Museum in Manchester on Monday, pledged to deliver 'good growth in every postcode' and promised what he described as the biggest transfer of power away from Westminster in modern British history. The former Greater Manchester mayor, who earned his 'King of the North' nickname for his leadership during COVID, presented his vision for 'Manchesterism' involving greater devolved power for the different regions of England. Burnham confirmed he will set up a 'Number 10 North' operation in Manchester, with the body tasked with pushing power and investment out of Whitehall into the regions while sticking to 'the discipline of our current fiscal rules'. The plan includes the biggest council housebuilding programme since the postwar period, a reform of business rates to support pubs and high streets, and a 'complete rethink' of schools to give technical education 'parity' with academic routes. As per Investing.com, Burnham returned to Westminster this month and is, so far, the only declared candidate to replace Keir Starmer within weeks, with markets remaining sensitive to any suggestion of higher government borrowing given the UK's already fragile public finances.
British stocks pared earlier losses as Iran requested fresh talks with the U.S. in Doha, with the FTSE 100 down 0.04% to 10,503.91 having earlier traded as low as 10,472.87. According to Investing.com, U.S. President Donald Trump confirmed on Truth Social that Iran had requested a meeting with U.S. officials, which was due to take place Tuesday in Doha. The development follows a weekend of strikes between the two sides before both agreed to stand down, with Iran's president Masoud Pezeshkian saying the country is set to receive $6 billion of its frozen assets held in Qatar as part of the financial terms in the U.S.-Iran memorandum signed earlier this month. However, accounts of Tuesday's meeting diverged, with a U.S. official saying talks were set to continue and vessels could move freely through the Strait of Hormuz, while Iran's deputy foreign minister said no technical meetings were planned for this week.
Sterling has fallen around 1.7% this month, reflecting both domestic political uncertainty and broad U.S. dollar strength following the U.S.-Iran peace agreement and last week's hawkish Federal Reserve meeting. As reported by Investing.com India, markets have continued to increase expectations for another Fed rate hike this year after Core PCE, the Fed's preferred inflation measure, rose to 3.4%, its highest level in three years. Attention now turns to Thursday's U.S. non-farm payrolls report, which could provide further insight into the strength of the labour market and whether the Fed is likely to tighten policy again. Fed Chair Kevin Walsh is also due to speak on Wednesday, adding to the week's key economic events. The dollar rally showed signs of fatigue in the back end of last week, and analysts suggest it may require some hawkish data inputs this week to avert further slippage. However, the dollar has embedded plenty of positives of late, and analysts maintain a preference for fading new USD rallies.
GBP/USD continues to trade below its falling trendline resistance and beneath both the 50 and 200-day SMAs, keeping the broader bias tilted to the downside. According to technical analysis from Investing.com India, the pair is testing support around the 1.3200–1.3250 zone. Sellers will look for a break below this area to expose the psychological 1.3000 level, while should support hold, buyers will need to reclaim 1.3250 before targeting resistance around 1.3335. A move above there would expose the 200-day SMA near 1.3400. Analysts continue to target a move back above 0.870 in EUR/GBP this summer, with the short-term fair value model indicating modest undervaluation (around 0.4%). Political risk may resurface, and pricing for 25p of Bank of England tightening still appears too hawkish in their view.
Market attention is pinned on the European Central Bank's annual Sintra Forum, which opens today with ECB President Christine Lagarde scheduled to deliver the opening remarks. According to Investing.com, high-profile policy panels featuring Federal Reserve Chair Kevin Warsh and Bank of England Governor Andrew Bailey will follow, with traders hunting for clues to validate or challenge current money market pricing. Currently, markets expect at least one more 25-basis-point interest rate hike this year from the ECB, following its recent deposit rate increase to 2.25%. Fed expectations stand at two 25-basis-point rate increases by December. The macro team looks for slightly above-consensus inflation at 3.1% headline and 2.6% core, which would point to a stalling trend but not one that allows the ECB to ease its guard. The preference emerging from the many ECB speakers this week may well be to keep markets leaning toward a hawkish bias so that inflation expectations remain in check. Analysts expect another hike in September, with EUR/USD still facing downside risks from any new USD bull revamp, but a broadly hawkish tone in Sintra can offer some help on the margin.
