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British Pound edges up above 1.3200 after PM Keir Starmer’s resignation

  • GBP/USD edges up above 1.3200 as Prime Minister Keir Starmer announces his resignation.
  • The decision was widely expected with his leadership in question, following a severe defeat in local elections in May.
  • Andy Burnham, the Mayor of Manchester, emerges as the best-positioned candidate to replace Starmer.

The British Pound (GBP) nudged up above 1.3200 against the  US Dollar (USD) on Monday and maintains a mild positive tone, despite news that Sir Keir Starmer resigned as Prime Minister of the United Kingdom and Leader of the Labour Party.

Starmer appeared outside 10 Downing Street earlier on Monday to announce his resignation, adding that he will remain in charge until the party decides on a new leader and pledging support to whoever is the next PM.

The decision was widely expected by the market, as his position as prime minister was seriously called into question after a severe defeat in the local elections in England, Scotland and Wales that delivered a sound victory to Nigel Farage’s Reform UK populist party. 

Starmer’s weakness increased last week as the Manchester Mayor, Andy Burnham, the best-positioned Labour leader to replace him, won a seat in parliament, the requirement to become the next prime minister. Later on the day, Burnham is expected to be at Westminster today to be sworn in as MP for Makerfield.

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Chart of The Day – What’s Next for EUR/USD

EUR/USD: The dollar takes centre stage — geopolitics, the Fed and the ECB are driving the pair EUR/USD has come under strong selling pressure, testing key support around 1.1440–1.1420 — a level clearly visible on the chart as a broad, horizontal zone of demand, which has repeatedly halted sell-offs over recent months.

Geopolitics: the US–Iran relationship and the Strait of Hormuz

Today, 22 June, technical talks are taking place in Switzerland between the US, Iran, Pakistan and Qatar, and both sides have agreed on a ‘roadmap’ to finalise the agreement within 60 days. However, tensions remain due to the fact that Iran has once again closed the Strait of Hormuz just before the talks began, and Trump is not backing down from his threats to resume attacks — this is fuelling volatility in the energy markets and limiting the euro’s appreciation. Geopolitical de-escalation is, in theory, a tailwind for the euro (capital outflows from safe-haven assets such as the USD), but until the negotiations are concluded, it will be difficult to weaken the dollar on a sustained basis.

Fed: Are we expecting rate hikes?

The Fed Fund Futures table and the CME FedWatch Tool clearly show how expectations have evolved. For the upcoming meeting on 29 July 2026 the market is pricing in a 64.7% probability that rates will remain in the 350–375 bps range, whilst the chances of a rise to 375–400 bps stand at 35.3%. At its meeting on 16–17 June 2026 — the first chaired by the new Fed chair, Kevin Warsch — the FOMC unanimously kept rates at 3.50–3.75% , leaving them unchanged for the fourth consecutive time. However, this is not the main news. The key message comes from the new dot-plot projections: 9 out of 18 Fed officials now expect at least one rate hike in 2026, whilst 6 of them anticipate two or more hikes — this is a dramatic shift from March, when none of the committee members had forecast any rises.

The media projection for the interest rate at the end of 2026 now stands at 3.8% — 0.16 percentage points above the current level — which the market interprets as a clear shift towards tightening. Inflationary pressure, fuelled by a surge in oil prices resulting from the US–Iran conflict, has forced the Fed to revise its stance: almost half of the FOMC does not believe that simply maintaining interest rates will be sufficient to bring inflation down to the 2% target.

Derivatives markets are already pricing in ~60% chance of at least one rate rise before the end of the year , with the highest probability at the September or October meeting. This is fundamentally a bullish environment for the dollar — and directly explains the pressure on EUR/USD visible on the chart. The prospect of higher US interest rates, coupled with divergence from the ECB (deposit rate of 2.25%), is widening the yield spread in favour of the USD. The Fed Funds Futures table confirms this picture: from the December 2026 meeting onwards, the probability of rates in the 400–425 bps range is increasing, which means that the market is gradually pricing in a cycle of rate rises — not cuts.

ECB: The rate rise is a backdrop, not a catalyst

On 11 June, the ECB raised the deposit rate by 25 basis points to 2.25% — in line with expectations. The bank also raised its inflation forecast for 2026 to 3.0% from the previous 2.6%. However, this move had already been fully priced in by the market and does not provide direct support for the EUR — as can be seen in the chart, where the pair continues to weaken despite the rate rise. The interest rate differential between the Fed (4.25–4.50 per cent) and the ECB (2.25 per cent) continues to strongly favour the dollar, and the ECB’s rate rise alone does not alter this arithmetic to a sufficient extent.

What can be seen on the EUR/USD D1 chart

The EUR/USD daily chart shows the pair testing critical support at ~1.1420–1.1444 — a level that has been defended several times by the bulls since spring 2025. The RSI(14) at 32.6 is close to the oversold zone (the 30 threshold), signalling a potential technical rebound. However, the moving average configuration is bearish: the price has broken below the EMA50 (1.1599) and the EMA100 (1.1682) and is approaching the EMA200 (1.1824) from below — all three moving averages above the price are forming dynamic resistance. The Bollinger Bands indicate the lower band at 1.1420, which coincides with the support zone.

Outlook for the coming days:

If the 1.1420 support level holds and US–Iran talks confirm progress, the RSI may rebound and the pair could move back towards 1.15–1.16. A break below 1.1420 would pave the way for a test of 1.13+. As long as the Fed remains ‘hawkish-cautious’ and negotiations on the Middle East front remain volatile, any rebound in the EUR is likely to be short-lived.

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Euro edges higher against British Pound amid UK political uncertainty

  • EUR/GBP edges higher to near 0.8670 in Monday’s early European session. 
  • UK PM Starmer was considering his political future after rival Andy Burnham’s decisive election victory in parliament.
  • UK Retail Sales climbed  3.2% YOY in May, beating expectations. 

The EUR/GBP cross gathers strength to around 0.8670 during the early European trading hours on Monday. The British Pound (GBP) weakens against the Euro (EUR) due to political uncertainty in the United Kingdom (UK). European Central Bank (ECB) President Christine Lagarde is scheduled to speak later in the day. The preliminary readings of Purchasing Managers Index (PMI) from Germany, the Eurozone, and the UK will be highlighted later on Tuesday. 

UK Prime Minister Sir Keir Starmer is expected to resign to make way for a new leader. It came as cabinet ally Peter Kyle said the UK leader was considering “political realities” after Andy Burnham’s victory in the Makerfield by-election last week cleared a path for him to challenge for the Labour leadership.

“Markets will be focused on Burnham’s views on fiscal policy and whether there will be any relaxation of the current fiscal rules,” said Commonwealth Bank of Australia strategists, including Kristina Clifton. “A loosening in fiscal rules would likely be poorly received by the UK bond market” and weigh on the pound, they said.

Nonetheless, hotter-than-expected UK Retail Sales data might cap the downside for the GBP. UK Retail sales rose 3.2% year-on-year in May, versus 0.1% prior,  the Office for National Statistics (ONS) showed on Friday. This figure beat market expectations of a 1.9% annual increase. On a monthly basis, Retail sales increased 1.2% in May, following a revised 1% decline in April.

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Euro strengthens against Canadian Dollar as oil prices decline

  • EUR/CAD rises as the commodity-linked Canadian Dollar weakens following a drop in crude prices triggered by successful US-Iran talks.
  • Qatar and Pakistan agreed to a 60-day roadmap to secure a final peace agreement, per a joint statement.
  • Traders closely await ECB President Lagarde’s highly anticipated speech later on Monday for potential monetary policy clues.

EUR/CAD extends its gains for the second successive day, trading around 1.6260 during the Asian hours on Monday. The currency cross appreciates as the commodity-linked Canadian Dollar (CAD) loses ground amid lower oil prices, given Canada’s status of the largest crude exporter to the United States (US).

West Texas Intermediate (WTI) oil price declines nearly 2%, trading around $75.00 per barrel at the time of writing. Crude oil prices depreciated following the successful conclusion of US-Iran talks in Switzerland, effectively easing global market anxieties regarding a potential supply shortage. A key driver of this market relief was Tehran’s announcement that it had successfully secured critical waivers for its oil and petrochemical exports.

Complementing the diplomatic breakthrough, mediators Qatar and Pakistan released a joint statement from Switzerland confirming that both nations have agreed to a formal, structured roadmap aimed at securing a final peace agreement within the next 60 days.

Providing further details on the negotiations, Iranian Foreign Minister Abbas Araqchi confirmed that the diplomatic progress yielded several major concessions for his country. In addition to the vital export waivers for oil and petrochemicals, the agreed-upon terms include the release of a portion of Iran’s frozen financial assets, alongside the official launch of a comprehensive domestic reconstruction and development plan.

On the macroeconomic front, European Central Bank (ECB) policymaker and Belgian central bank head Pierre Wunsch indicated on Friday that the central bank may implement one more interest rate hike as early as next month. This potential monetary tightening depends on whether the ECB observes further evidence of Eurozone inflation spreading beyond the energy sector into the broader economy. Market participants are now closely watching ECB President Christine Lagarde, who is scheduled to deliver a highly anticipated speech later in the day.

Euro Price Today

The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the Canadian Dollar.

USDEURGBPJPYCADAUDNZDCHF
USD0.15%0.24%0.23%0.25%0.13%0.18%0.11%
EUR-0.15%0.09%0.07%0.09%0.03%0.06%-0.03%
GBP-0.24%-0.09%-0.02%-0.00%-0.07%-0.03%-0.11%
JPY-0.23%-0.07%0.02%0.02%-0.09%-0.05%-0.10%
CAD-0.25%-0.09%0.00%-0.02%-0.12%-0.09%-0.12%
AUD-0.13%-0.03%0.07%0.09%0.12%0.06%-0.02%
NZD-0.18%-0.06%0.03%0.05%0.09%-0.06%-0.06%
CHF-0.11%0.03%0.11%0.10%0.12%0.02%0.06%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).

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GBP/USD – UK political uncertainty calls fresh leg of downfall ahead

  • GBP/USD trades lower to near 1.3220 on renewed UK political uncertainty.
  • US President Trump says UK PM Starmer could resign on failing to fix immigration and energy issues.
  • The Fed is expected to deliver at least two interest rate hikes this year.

The GBP/USD pair recovers some of its early losses, but is still 0.1% down to near 1.3220 during the early European trading session on Monday. The pair remains under pressure amid renewed United Kingdom (UK) political uncertainty after comments from United States (US) President Donald Trump that Prime Minister (PM) Keir Starmer could resign on failing to fix immigration and energy issues.

“Keir Starmer will resign as Prime Minister of The United Kingdom. He failed badly on two very important subjects- IMMIGRATION AND ENERGY (OPEN NORTH SEA OIL!). I wish him well!,” US President Trump wrote in a post on Truth Social.

Meanwhile, calls from Labour lawmakers against PM Starmer continuing UK leadership have also accelerated, following Andy Burnham’s strong win in the Makerfield constituency in north-west England.

A Reuters report has shown that UK PM Starmer could decide as early as Monday whether to remain in office and fight a leadership contest or begin the process of stepping down.

Also, an upbeat US Dollar (US) due to increased expectations that the Federal Reserve (Fed) could deliver two interest rate hikes this year is also keeping Cable under pressure. According to the CME FedWatch tool, the odds of the Fed delivering at least two interest rate hikes this year is 58.5%, a sharp increase from 17.1% seen a week ago.

Hawkish Fed bets have strengthened following the first monetary policy announcement on Wednesday under new Chairman Kevin Warsh.

GBP/USD technical analysis

Bias: GBP/USD trades lower at around 1.3218 at press time. The pair maintains a bearish near-term tone as it holds below the 20-period Exponential Moving Average (EMA) at 1.3360. Also, a breakdown of the Symmetrical Triangle strengthens the bearish bias. The Relative Strength Index (RSI) near 34 hovers just above oversold territory, hinting at a dominant downside momentum.

Resistance: On the topside, initial resistance is seen at the broken rising trend-line region near 1.3250, followed by the 20-period EMA at 1.3360.

Support: On the downside, the pair could slide towards the November 25 low at 1.3096 if it resumes its decline below the June 19 low at 1.3163. The pair could extend its decline towards the psychological support at 1.3000 once it falls below 1.3096.

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Euro: Consolidation before potential slide against US Dollar – UOB

United Overseas Bank’s (UOB) Quek Ser Leang and Lee Sue Ann highlight that EUR/USD remains under pressure after briefly dipping to 1.1416 before rebounding. They see scope for short-term consolidation between 1.1435 and 1.1495 as oversold conditions unwind, but maintain a bearish bias toward 1.1410, and warn that a break of the 1.1390/1.1410 support zone could open the way to 1.1210.

Oversold Euro pauses within range

“24-HOUR VIEW: When EUR was at 1.1460 in the early Asian session last Friday, we indicated that “conditions are deeply oversold, but there is scope for EUR to drop below the support at 1.1445.” However, we held the view that “the major support at 1.1410 is unlikely to come under threat.” EUR subsequently dropped to a low of 1.1416, rebounding to close at 1.1468 (+0.10%). Downward momentum is slowing, and conditions are unwinding from oversold levels. In other words, instead of continuing to decline, EUR is more likely to consolidate today, probably between 1.1435 and 1.1495”

“1-3 WEEKS VIEW: Last Thursday (18 Jun, spot at 1.1505), we highlighted that while EUR “is expected to remain under pressure, but it may need some time to consolidate before making a move to 1.1445.” After EUR dropped to 1.1450, we highlighted on Friday (19 Jun, spot at 1.1460) that “a breach of 1.1445 will not be surprising, and the next technical target is 1.1410.” EUR subsequently declined to a low of 1.1416 before rebounding. While there is still scope for EUR to decline to 1.1410, oversold short-term conditions could lead to 1-2 days of consolidation first. Overall,

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Russian Ruble: Hawkish central bank and limited FX impact – Commerzbank

Commerzbank’s Michael Pfister notes that the Russian Central Bank surprised markets by cutting rates only 25 bps to 14.25%, instead of the 50 bps expected, signalling a hawkish stance and caution on further easing. However, he argues this offers little support for the Russian Ruble (RUB), given capital controls, indirect pricing via Chinese Yuan (CNY) and US Dollar (USD), and the dominance of war and energy shocks for RUB performance.

Hawkish cut fails to lift RUB

“Instead of cutting rates by 50 basis points, they were cut by just 25 to 14.25%, accompanied by a statement that a decision on whether to implement further rate cuts would first have to be made at forthcoming meetings. This was thus a strong hawkish signal.”

“As expected, this did little to help the rouble. If the rouble were a freely tradable currency, such a signal would have triggered a rally despite considerable political pressure.”

“But the rouble is no longer freely tradable; it is now quoted solely via indirect links through the CNY-RUB and USD-CNY exchange rates.”

“Consequently, even if the central bank were to halt interest rate cuts in the near future, it would do the currency little good. As no real capital inflows are possible, market participants find it difficult to benefit from the higher interest rate, and the rouble cannot appreciate either.”

“The rouble only appreciates when there are prospects of an imminent end to the war (coupled with the hope that sanctions will be eased), or in the event of a significant energy price shock, as we have seen in recent months. Monetary policy cannot change this.”

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Swiss Franc remains subdued nearly seven-month lows

  • USD/CHF holds gains at a nearly seven-month high of 0.8091.
  • The US Dollar gains support as a renewed US-Iran peace deal lifts safe-haven demand.
  • The SNB will sell Swiss Francs if rapid appreciation threatens price stability.

USD/CHF remains stronger for the fourth consecutive day, trading around 0.8080 during the Asian hours on Monday. The pair remains close to a nearly seven-month high of 0.8091, reached on June 19, as the US Dollar (USD) receives support from safe-haven demand, which could be attributed to renewed concerns over a US-Iran peace deal.

CNBC reported on Sunday that US President Donald Trump threatened direct strikes on Iran if Hezbollah continues its attacks on Israel. This warning has severely clouded the outlook for diplomatic progress between Washington and Tehran, completely dismantling the current peace framework, even as Vice President JD Vance met with Iranian officials for the first round of talks under an interim deal.

Meanwhile, Tehran simultaneously announced it had once again closed the strategic Strait of Hormuz. While Iranian state media reported that Tehran had completely suspended negotiations in response to Trump’s remarks, sources close to the matter indicated that discussions are quietly ongoing.

Moreover, the Greenback receives support as the Federal Reserve (Fed) adopted a decidedly hawkish tone after keeping interest rates steady last week. Notably, 9 out of 19 Fed policymakers now project at least one interest rate hike this year, with market investors pricing in a potential increase as early as September.

Swiss National Bank (SNB) President Martin Schlegel reaffirmed the central bank’s readiness to intervene in the foreign exchange market, stating they will sell Swiss francs (CHF) if rapid appreciation threatens price stability.

With inflation remaining subdued within the 0–2% target range and minimal upward pressure ahead, the SNB held its policy rate steady for a fourth straight meeting, indicating no near-term plans to tighten policy.