Sterling falls 0.4% against the dollar as political transition in Britain meets robust US economic activity reports.
The British pound declined 0.4% to 1.3195 against the US dollar on Tuesday, retreating from a daily high of 1.3259. The move follows the resignation of UK Prime Minister Keir Starmer, with Andy Burnham set to take over amid investor concerns over potential fiscal expansion under the new leadership.
UK Gilt yields remained subdued, reflecting caution among investors. Meanwhile, the US dollar index (DXY) climbed 0.34% to 101.34, reaching a new yearly high. Strong US economic data underpinned the greenback, with S&P Global’s Manufacturing PMI rising to 55.7 from 55.1, and Services PMI increasing to 51.3 from 50.7, both exceeding forecasts.
The shift in risk sentiment weighed on the pound, while US exceptionalism continued to support the dollar. Fed funds futures remained stable as markets digested the latest economic indicators.