Sterling opens in red to both EUR and USD this morning with mounting concerns for the government and their bond yields. Yield levels reaching its highest level since 1998 of 5.691%. While they’re trying to make bonds attractive for investors with higher returns, the bigger issue is in the underlying debt the government has created that now is growing. In the first half of 2025 we did see tax increases in the UK, and many experts suggesting that ahead of the autumn budget further tax increases will be required from Chancellor Rachel Reeves to address the already mounting deficit.
GBP saw losses of around half a percent to the EUR in the opening hours, while GBP/USD were the more impacted. On top of rising fiscal fears out of the UK, we did see a military parade in China taking place, with invites to Russian President Vladimir Putin and supreme leader of North Korea Kim Jong Un attending. The western worlds have seen this as uncertainty to the war in Ukraine and the brewing conflict that could affect Taiwan. USD took gains, being a safe-haven currency. GBP/USD is currently down one percent since this morning session opening.
At 10am today we will see core inflation and inflation levels being released from the Euro Zone. Expectations is that inflation levels should stay unchanged at 2%, which would confirm the stance from ECB (European Central Bank) to hold interest rate levels at bay.
In the afternoon session we have a bundle of US data being released, with high impact data from ISM manufacturing PMI. Compiled data from purchasing and supply executives reflect on changes and indicators of business activity moving forward. Forecast suggest a slight uplift from 48 to 49, still below the important threshold of 50 which would be seen as a positive region.
GBP/EUR 1.1504 GBP/USD 1.3402 GBP/AED 4.9255
GBP/AUD 2.0581 GBP/CHF 1.0777 GBP/CAD 1.8460
GBP/NZD 2.2892 EUR/USD 1.1638 GBP/ZAR 23.7366