British Pound: Political uncertainty and EUR/GBP upside – Commerzbank
Commerzbank’s Michael Pfister highlights rising political uncertainty around UK Prime Minister Keir Starmer and the potential succession of Andy Burnham, stressing implications for the Pound. He warns that a drawn-out leadership struggle or looser fiscal stance could weigh on Sterling. Given these risks and expected ECB tightening versus a steady Bank of England, Pfister sees EUR/GBP aiming for higher levels in coming weeks.
UK politics weigh on Sterling outlook
"If a power struggle ensues, the pound is likely to suffer from the resulting uncertainty."
"Burnham will endeavour not to unsettle the markets too much. The risks, however, are likely to be asymmetric. If he succeeds in maintaining the status quo, the pound will react positively."
"But if he calls the fiscal rules into question, the pound is likely to depreciate significantly."
"Given these political risks, we remain sceptical about the pound for the time being. If the Bank of England leaves interest rates unchanged while the ECB delivers another rate rise in September, as we expect, EUR-GBP is likely to target higher levels in the coming weeks."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
You may also like
The AI boom may follow the path of the 19th-century railway bubble, and builders may not be the ultimate winners
Goldman Sachs analyst Bobby Molavi compared the current situation to the 19th-century British railway mania: 500 companies spent more than the nation's annual income building 8,000 miles of railway, with most early investors losing out, while the real beneficiaries were the later "passengers." He pointed out that the current AI craze is driven by both debt and momentum, and that the S&P 500’s forward P/E ratio of 18x is only "a bit cheaper." Whether the builders can retain value is uncertain, and history does not offer an optimistic answer.
If Anthropic's IPO goes smoothly and the stock price rises next week, then everything remains the same for AI. Otherwise, some companies will go bankrupt.
The shrinking valuations of two major giants have triggered a chain reaction—investors are adopting more conservative revenue multiples for AI startups and are directly halting high-valuation financing for companies with zero revenue. Multiple venture capital firms have advised their portfolio companies to lower valuation expectations and to quickly build up cash reserves. Market participants warn that the outcome of Anthropic’s IPO will be a barometer for the industry: if successful, the boom will continue; if it fails, some companies may face elimination.
After the Brazilian election, political discount deepens; Morgan Stanley remains bullish on Petrobras (PBR.US), focusing on fuel pricing and dividends
Morgan Stanley still maintains its most optimistic "Overweight" rating, but has lowered its year-end 2027 target price from $31 to $25.
Corning (GLW.US) receives initial "Buy" rating from Jefferies! AI factories driving a fiber optic rush, with a potential global supply gap of up to 30%
For Corning, the recent profit growth mainly comes from the expansion of AI clusters. As the number of optical links crossing cabinets and campuses increases, customers need to deploy more optical fibers within limited conduit and cabinet space, thus driving demand for high-density optical cables and connection systems.
Crypto prices
More
