The pound opened the third quarter at $1.32, near a seven-month low, after a 1.4% drop against the US dollar in June, driven by political uncertainty, a stronger dollar, and the Bank of England’s dovish stance.
Investors are closely following the ECB’s Sintra Forum for insights into economic outlooks and policy directions.
Bank of England Governor Andrew Bailey stated that the central bank is not rushing to respond to rising oil prices and that inflation is on track to return to the 2% target, though later than desired.
He also forecasted inflation to rise to about 3.2% later this year, up from the current 2.8%.
Meanwhile, the dollar remained supported by expectations of US rate hikes later in 2026.
Elsewhere, investors awaited clarity on the new Treasury leader to replace Rachel Reeves.
Andy Burnham, the frontrunner to succeed outgoing Prime Minister Keir Starmer, pledged fiscal discipline on Monday, but offered no further details or potential ministerial appointments.