Pound Sterling Forecast: Andy Burnham Focus as GBP Holds Near Multi-Week Lows

– Written by


David Woodsmith

STORY LINK Pound Sterling Forecast: Andy Burnham Focus as GBP Holds Near Multi-Week Lows

The Pound US Dollar (GBP/USD) exchange rate traded unevenly on Monday, hovering just above an 11-week low as Prime Minister Keir Starmer stepped down as Labour leader.

At the time of writing, GBP/USD was trading at $1.3221, leaving the pairing virtually unchanged on the day.

The Pound (GBP) opened Monday’s European session on weaker footing, as investors prepared for Prime Minister Keir Starmer to step down as Labour Party leader.

Ahead of the announcement, UK government borrowing costs ticked higher, with markets unsettled by the prospect of renewed political uncertainty and the UK potentially appointing its seventh prime minister in ten years.

However, Sterling was able to claw back some of its losses following Starmer’s resignation speech.

The outgoing Prime Minister outlined a clear timeline for his exit and pledged to oversee a smooth handover of power. This helped ease some of the immediate political anxiety, allowing investors to turn their attention towards the likely policy agenda of Starmer’s expected successor, Andy Burnham.

The US Dollar (USD) opened the week on firm footing, though the currency struggled to extend its gains amid ongoing uncertainty in the Middle East.

Over the weekend, US-Iran tensions intensified after Tehran warned it would withdraw from talks and block the Strait of Hormuz. The threat came in response to Israeli strikes on Lebanon and escalatory comments from US President Donald Trump.

However, market sentiment then steadied on Monday morning after Iranian Foreign Minister Abbas Araghchi said ‘major progress’ had been made towards ending Israel’s war in Lebanon.

These conflicting developments left USD trading in a tight range, with the ‘Greenback’ retaining much of the support it had gained late last week.

Near-Term GBP/USD Forecast: UK and US PMIs in Focus

Looking ahead, Tuesday’s trade could bring fresh movement for the Pound US Dollar exchange rate, with June’s preliminary UK PMI surveys due for release.

The Pound may come under pressure if the figures confirm another weak month for the UK economy. Manufacturing activity is expected to have cooled slightly, while the more important services index is forecast to show stagnation after slipping into contraction territory in May.

As a result, lacklustre readings could leave Sterling struggling. That said, any stronger- or weaker-than-forecast results may trigger more pronounced GBP volatility.

Speeches from Bank of England (BoE) policymakers Swati Dhingra and Alan Taylor could also influence Sterling. As both are seen as dovish members of the BoE, cautious commentary may weigh on the Pound.

Meanwhile, the US Dollar could take direction from America’s own PMI releases. While the S&P Global surveys tend to have less impact than the ISM PMIs, they may still drive USD movement. Mixed figures could leave the ‘Greenback’ trading without a clear bias.

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TAGS: Pound Dollar Forecasts