British Pound gains as UK Burnham pledges continuation of current Labour policy
The British Pound (GBP) outperforms its major currency peers, trading 0.25% higher to near 1.3230 against the US Dollar (USD) during the European trading session on Monday. The United Kingdom (UK) currency gains as Greater Manchester Mayor Andy Burnham, the frontrunner for the leadership position after Prime Minister (PM) Keir Starmer’s resignation, has vowed to continue the principles of the Labor Party’s 2024 manifesto, a scenario that indicates the continuation of ongoing fiscal policy.
No change in the UK’s policies means no fresh boost to interest obligations for the government on fresh debt, which generally happens when the political shift is done between different parties. In the European trade, 10-year UK Gilt Yields have given back their slight gains and are marginally lower to near 4.73%.
“Our plans are consistent with 2024 Labour manifesto,” UK Burnham said.
On the monetary policy front, investors seek fresh cues regarding how long the Bank of England (BoE) will keep interest rates at 3.75%. In the policy announcement this month, the BoE left policy rates steady, with a 7-2 majority. BoE Monetary Policy Committee (MPC) member Megan Greene voted for an interest rate hike, calling it an “insurance against larger second-round inflation effects”.
Meanwhile, the US Dollar trades slightly lower, with investors awaiting the United States (US) Nonfarm Payrolls (NFP) data for June, which will be released on Thursday. Investors will pay close attention to the US NFP data to get fresh cues regarding the Federal Reserve’s (Fed) monetary policy outlook.
According to the CME FedWatch tool, there is an almost 80% chance that the Fed will deliver at least one interest rate hike this year.
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.
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