GBP rises despite Starmer’s resignation; USD gains vs EUR and JPY
The USD is mixed with the USD higher vs the EUR and the JPY but lower vs the GBP. The GBP’s move to the upside is the only wandering currency from what is a higher US dollar move to start the new trading week and comes despite UK Prime Minister Keir Starmer officially announced his resignation after growing pressure from within the Labour Party and a sharp decline in political support.
The resignation comes just a day after President Donald Trump unconventionally (can he do anything respectfully) posted on Truth Social that Starmer “will resign," criticizing his policies on immigration and energy.
Nevertheless, Starmer said he had “heard the message" from colleagues and will remain as caretaker prime minister until a new Labour leader is chosen.
Attention is now turning to the party’s leadership contest, with Andy Burnham viewed as a leading contender to succeed him.
The GBP has seen down and up price action but is trading near highs as the markets react more positively. The UK FTSE 100 is up 0.50% in premarket trading. The 10 year yield in the UK is down -3.4 basis points.
In the geopolitical news from the peace negotiations, the U.S. and Iranian negotiators wrapped up the first round of high-level talks in Bürgenstock, Switzerland, with both sides describing the discussions as constructive and agreeing to a 60-day roadmap toward a broader peace and security agreement. While major differences remain, the talks appear to have made more progress than many had expected.
Key Developments
- Iran agreed in principle to allow UN nuclear inspectors back into its facilities, a significant confidence-building measure and one of the biggest breakthroughs from the talks.
- The two sides established a communication line for the Strait of Hormuz aimed at preventing military misunderstandings and ensuring the safe passage of commercial shipping.
- Negotiators also agreed to create a “deconfliction cell" for Lebanon to help reduce tensions involving Hezbollah and Israel and prevent a renewed escalation in fighting.
- A high-level committee will oversee technical negotiations this week, focusing on nuclear issues, sanctions relief, and implementation mechanisms.
- Despite moments of tension—including reports of an Iranian walkout following President Trump’s comments on the Strait of Hormuz—talks ultimately resumed and concluded with both sides agreeing to continue discussions.
Market Takeaway
Financial markets are viewing the developments cautiously positively. Gulf equities moved modestly higher and oil prices eased as investors took comfort in the fact that the two sides are still talking and have put formal mechanisms in place to avoid further escalation.
Looking at other markets as North American traders enter for the day, US stocks are modestly higher with the Dow industrial average at 189 points, the S&P up 15.92 point and the NASDAQ up 138 points.
Crude oil futures are trading down $0.60 or -0.78%.
US yields are higher with a two-year of 4.2 basis points at 4.221%, the 10 year yield is up 4.3 basis points at 4.494%.
Alan Greenspan passed away at the age of 100. May he rest in peace
This article was written by Greg Michalowski at investinglive.com.